From Urban Renewal and Displacement to Economic Inclusion: San Francisco Affordable Housing Policy 1978-2012

Marcia Rosen and Wendy Sullivan Acknowledgements

The National Housing Law Project is grateful for the generous support from the San Francisco Foundation and the special interest given to this project by Vanitha Venugopal, its Director of Community Development and Investment, without which this report would not be possible.

The Poverty & Race Research Action Council is grateful for the support of the Ford Foundation’s Metropolitan Opportunity division, which also supported this work.

We also would like to acknowledge Derek Galey, candidate for a Juris Doctor at Harvard Law School and a Masters in Urban Planning from the Graduate School of Design at Harvard. As a legal intern with NHLP during the summer of 2012, Derek contributed a great deal of research, writing, enthusiasm and insight to this project.

We owe a special debt to Calvin Welch and Olson Lee, who each gave generously of their time, extensive knowledge and expertise to this effort. They should also be acknowledged for their passion for and commitment to affordable housing. The history of San Francisco’s progressive housing policies would not have been the same without their lives’ work.

Cover art courtesy of Fernando Marti, Co-director of the Council of Community Housing Organiza- tions, originally prepared for the "Yes on Proposition C" campaign. Report design by ampersand graphic design. From Urban Renewal and Displacement to Economic Inclusion: San Francisco Affordable Housing Policy 1978-2012

Marcia Rosen and Wendy Sullivan

NOVEMBER 2012 About the Authors Marcia Rosen Ms. Rosen has been NHLP’s Executive Director since November 2008. She has an extensive back- ground in housing and community development, including service in local government and as an attorney and Deputy Director of the Lawyers’ Committee for Civil Rights of the San Francisco Bay Area. Prior to joining NHLP, she served as Executive Director of the San Francisco Redevelopment Agency, a local government agency dedicated to promoting community, economic, and physical development of San Francisco’s distressed neighborhoods and the development and preservation of affordable housing, and as Director of the Mayor’s Office of Housing, where she was responsible for representing the mayor before local, state and federal agencies and legislative bodies and for administering the City’s local and federal housing funds. Before her eleven year stint in public service, her practice at the Lawyers’ Committee included representation of low-income people and community organizations in a broad array of civil rights cases and issues, focused primarily on housing, land use, economic and community development, and children and youth issues. Marcia was an active participant-observer of the events described in this report, first as an advocate representing the Council of Community Organizations and later as a public official designing and implementing the policies described herein. She has a B.A. from the University of Massachusetts, Amherst and a J.D. from the University of California, Hastings College of the Law. In 1999-2000, she was a Loeb Fellow at Harvard University’s Graduate School of Design, where she was engaged in interdisciplinary studies at the GSD, Kennedy School of Government, and Harvard Law School and wrote a case study on San Francisco development politics that was published by the Kennedy School. The opinions expressed herein are her own and do not reflect the views of the National Housing Law Project or any of its funders.

Wendy W. Sullivan Ms. Sullivan is an attorney and planning consultant with particular expertise in affordable housing. She has over ten years of experience helping communities throughout the western U.S. identify their affordable and workforce housing needs and develop plans to address those needs. Her work in conjunction with other team members has prompted county and community collaboration on affordable housing policies and development; initiated and supported the development of numerous tax credit, senior housing and deed-restricted ownership projects; and, specifically, assisted approval of the first permanent supportive housing development in Boulder, Colorado. She has a law degree from the University of Colorado, a master’s degree in regional planning from Washington State University and a bachelor in computer science (cum laude) from Colorado State University.

ii Table of Contents

I. Introduction...... 1 II. Emergence of the Community Affordable Housing Movement ...... 3 III. Financing Affordable Housing: Where Do We Get the Money?...... 6 Community Development Block Grant Program...... 6 Tax Increment ...... 8 Affordable Housing and Home Ownership Opportunity Bond...... 9 Other Local Funding Sources...... 10 IV. Evolution of Housing Policy...... 11 1970s: Neighborhood Preservation and Tenant Protection...... 11 Redevelopment and Urban Renewal...... 12 Residential Hotels...... 16 Rent Control and Condominium Conversions ...... 19 Shifts in Development Perspectives and Funding Opportunities...... 21 1980s: Equitable Development, Neighborhood Preservation, and New Resources...... 22 Generating Housing from Office Development...... 22 The “Ring Neighborhoods” Fight Back: Protecting Residential Uses In and Adjacent To Downtown from Encroachment by Commercial Uses ...... 25 New Resources: Federal and State Funding is Added to the Mix ...... 26 1990s: Inclusive Redevelopment, the Dot.Com Boom, and Housing Preservation ...... 26 Inclusive Redevelopment: This is Not Your Grandfather’s Redevelopment Agency!...... 27 Preservation of Federally-Assisted Affordable Housing...... 30 The Dot.Com Effect and Challenges for the Next Decade ...... 32 2000s: Increase Affordable Housing, Remedy Past Losses of Housing, and Face New Challenges...... 34 Increase Production ...... 35 Remedy Past Housing Losses and Displacement...... 37 The New Tech Boom...... 37 V. Future Challenges ...... 39 ______`1Low- dakfas;f and Moderate-Income Housing Gap...... 39 Demise of the SFRA and Birth of the Housing Trust Fund? ...... 41 VI. Conclusion ...... 45

iii Afterword: Considerations for Other Communities ...... 46 Resources ...... 48 Appendix 1. Racial and Family Composition of San Francisco Residents and Households: Challenges Ahead ...... 51 Appendix 2. Evolution of San Francisco Housing Policy ...... 57 Appendix 3. Map of San Francisco Neighborhoods and Project Areas...... 58 Appendix 4. List of San Francisco Housing Developments Highlighted ...... inside back cover

iv Poverty & Race Research Action Council National Housing Law Project

I. Introduction

Once notorious for urban renewal that diminished in the City during the 1970s spurred formation of housing affordability and displaced residents, the neighborhood and tenant organizations, bringing City of San Francisco is now renowned nationally resident housing needs to the City’s attention. These for its best practices in housing and community groups were originally focused on maintaining development. How did this “hot market” city with housing affordability in their communities and pre- limited land for development, extremely low rental venting the displacement of families from neighbor- vacancy rates and high demand for housing move hoods disrupted by the City’s urban renewal from archaic urban renewal practices to thoughtful programs and private development interests. The policies designed to preserve and enhance housing focus later expanded to include a community devel- opportunities for low income families, prevent dis- opment mission – the preservation and develop- placement of low income families, and create inclu- ment of affordable community housing and sive communities? resident services to meet the changing demographic needs of families, maintain the City’s diversity and San Francisco’s affordable housing and community mitigate the exclusive effects of the rising cost of development policies largely evolved during the late market housing within the City. Dedicated and 1960s through the present day, spanning periods of zealous community advocacy, strategic development rapid economic and demographic change, wide and allocation of funding sources, and responsive- scale commercial development, dramatic changes in ness to market changes and political opportunities land use, and exploding housing costs, which con- have resulted in a system of strong housing preser- tinue to threaten displacement of low income resi- vation and production policies, programs and dents. Prior to 1968, San Francisco’s affordable organizations in San Francisco. By ensuring the cre- housing stock was limited to public housing and ation and retention of a range of housing to serve other federally-funded housing that was developed diverse resident and community needs within the as part of the City’s urban renewal program. While City, these forces have counteracted the detrimental there was private market-rate housing affordable to effects of gentrification caused by market forces and low income families, thousands of units had been have kept affordable community housing in the lost to urban renewal. No state or local funding forefront of the City’s development and redevelop- sources were available for housing rehabilitation or ment decisions. development and no community-based infrastructure existed to take on this work. Extensive changes In a city that consistently places amongst the high- in the economic base and escalating housing prices est in the nation for its housing costs1 and is largely

______1 In June 2010, the California Association of Realtors reported that the median priced home in San Francisco was $670,000. This price is 115% higher than the State of California median ($311,950) and 266% higher than the national average ($183,000). In June 2010, the average rent was $2,230, which is affordable to households earning over $89,200 (or about 100% of the area median income for a 3-person household). San Francisco Planning Code § 415.1. Rents increased another 10% on average in 2011 and are 12% higher in 2012 than they were one year ago, meaning San Francisco had the steepest rent increase in the past year among the 25 largest housing markets in the country. 1 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

built out, production and preservation of homes building “not just housing, but communities;” and affordable to residents is a constant challenge. The constantly evolving housing programs that meet successful evolution of affordable housing programs new challenges and opportunities.2 The interaction in San Francisco cannot be understood by simply of these factors has allowed the City to take advan- looking at the local codes and ordinances, policies, tage of ever-changing markets and political forces to development requirements and restrictions sepa- maintain and develop strong local communities. rately; the whole is greater than the sum of its parts. This report describes the development and interac- Moreover, the overall success of the housing system tion of each of these four key components of hous- and policies employed is the result of an interaction ing program and policy development since the late of four key factors: dedicated community advocacy 1960s and how they have resulted in the current and strong coalitions; development of and access to dynamic affordable housing system in San substantial funding sources; a holistic vision of Francisco.

______2 In the latest example, San Francisco voters will have the opportunity to adopt a ballot measure, Proposition C, in the November 2012 elections that would establish a Housing Trust Fund generating substantial funding (estimated between $1.3 and $1.6 billion dollars) over the next 30 years. The measure is designed to replace and augment money that was lost by the state’s elimination of redevelop- 2 ment agencies and tax increment financing earlier in 2012. Poverty & Race Research Action Council National Housing Law Project

II. Emergence of the Community Affordable Housing Movement

San Francisco’s housing movement stems from its from displacement and enhance neighborhoods as severely constrained development potential: it has urban renewal, private development and market limited land capacity, roughly 47 square miles on interests sought to transform the City. the tip of a peninsula, with no ability to expand through Bay infill or annexation;3 and it is “built The community-based housing movement in San out,” with almost all its available land developed. Francisco developed between about 1968 and 1978, Consequently, “development in the City is a zero a time during which the City’s economic base was sum game, with winners and losers. With minor substantially transformed.5 Office workers began exceptions, new development in San Francisco, resi- displacing industrial workers and residential real dential or commercial, means the demolition and estate began climbing in price, propelling San displacement of what was there.”4 This means that, Francisco from one of the cheapest places to live in for any new development, the benefits of that devel- the Bay Area to among the most expensive.6 Several opment must be weighed appropriately against the significant events led to this transformation. First, loss of any displaced land uses and the threats to containerization of the maritime industry, largely neighborhood stability and housing security, and between 1960 and 1966, contributed to the appropriate mitigation measures must be put in economic downfall of the Port of San Francisco, place to prevent detrimental losses to the commu- resulting in a significant loss of industrial jobs, nity. With each new proposed development in San particularly for the African-American community.7 Francisco being a battle between competing land Thousands of industrial jobs were again lost in uses, the stage was set for building a strong commu- 1974, when the Hunters Point Naval Shipyard was nity movement to protect low income residents decommissioned and, with it, the economic base of

______3 In 1965, the Bay Conservation and Development Commission (BCDC) was established in response to the filling-in of an average of four square miles of the San Francisco Bay each year between 1850 and 1960 to create land, primarily for development. Since its establishment, only a few acres of the Bay are filled each year, mostly for water-oriented needs, and the Bay is now larger than it was when the BCDC was first established. See http://www.bcdc. ca.gov/bcdc_bay.shtml for more information. 4 Interview with Calvin Welch, San Francisco housing activist, lecturer in development politics, and former longtime Co-Director of the Council of Community Housing Organizations, July 20, 2012. 5 For more information on the development of the housing movement during this period, see Welch, Calvin (2011). “The Fight to Stay: The Creation of the Community Housing Movement in San Francisco, 1968-1978,” in Chris Carlsson and Lisa Ruth Elliott (Eds.), Ten Years that Shook the City: San Francisco 1968-1978 (pp. 154-162). San Francisco: City Lights Books. 6 See Chart 1, below. 7 Across the San Francisco Bay, the Port of Oakland was an early leader in the movement to containerized cargo, assisting its swift rise to dominance in ocean borne shipping. As a result, the number of jobs related to water borne commerce in San Francisco decreased from 23,000 in 1964 to 11,000 in 1978. Ownership of the Port of San Francisco was officially transferred from the state to the City and County of San Francisco in 1969. SPUR. The Decline of the Port. Retrieved Sept. 27, 2012 from the SPUR website: http://www.spur.org/publications/library/ article/declineofport11011999.; World Port Source. Port of Oakland Review. Retrieved Sept. 27, 2012 from the World Port Source website: http://www.worldportsource.com/ports/review/USA_CA_Port_of_Oakland_231.php. 3 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

the Hunters Point neighborhood. Once again, the spurred a significant rise in housing prices, exacer- African American working community suffered bated by the focus, over preceding years, on com- heavy, negative impacts.8 Second, the Bay Area mercial, at the expense of residential, development.12 Rapid Transit (BART) system ran its first train in 1972, linking much of the Bay Area with San The loss of affordable housing, displacement of resi- Francisco and increasing the pool of suburban dents, shifts in the economy and the lack of perma- workers to fill jobs in the City. Third, as part of the nent labor jobs during the early years of urban plan to position San Francisco as the “corporate renewal rallied residents to fight against displace- headquarters” of the Pacific Rim, explosive growth ment and brought housing and land use issues to in commercial office buildings occurred. With the forefront of local community agendas. “Indeed, BART in place to bring suburban workers from the first wave of gentrification happened before we neighboring counties into San Francisco’s down- even knew what to call it,” recalled Calvin Welch.13 town, and the burgeoning commercial space in By the late 1970s, a tenants’ movement had which to place them, white-collar jobs in the retail, emerged, environmental issues had become part of office and financial sectors quickly became the driv- development politics and various community ing force of the City’s economy.9 Fourth, by 1978, organizations had formed to advocate for the spe- as part of this new City vision, ten different areas in cific issues and needs of particular neighborhoods. the City were designated for urban renewal to revive New community development corporations and blighted areas of the City, ultimately resulting in the non-profit housing development organizations San Francisco Redevelopment Agency’s (SFRA)10 helped promote and meet community development demolition of low income affordable housing in needs. These various interests coalesced into a city- several neighborhoods and displacement of resi- wide housing movement calling for, among other dents.11 Finally, in 1974, gas prices rose to over $1 things: rent control; anti-speculation measures; per gallon, causing suburban office workers to preservation of residential hotel units; limits on return to the central city in search of homes. This condominium conversion; preservation of down-

______8 Jacobson, Daniel and Stallworth, Chris (2009). Bayview-Hunters Point: Urban Transformations and Community Cooptation, Urban- ist, 161, 9-13. At its peak in 1945, the Shipyard employed 18,235 workers; at closure in 1974, there were approximately 5,000 jobs. Hunters Point Shipyard: A Community History 1996. See Appendix 1. for more information about changes in the African American population over the decades. 9 From 1965 through 1980, 36 million square feet of office space was added. 25 Years: Downtown Plan Monitoring Report/1985- 2009, San Francisco Planning Department, June 2011, Appendix B, Table 1. New Office Construction. At the time, San Francisco was second only to Boston in its ratio of office space to population. While office growth from 1965 to 1980 created some 166,000 new jobs, the number of employed San Francisco residents declined by nearly 18,000, indicating that the new jobs were created for out-of-area workers. Hartman, Chester (1984). The Transformation of San Francisco (pp. 2, 3, 6-7, 262). Totawa, NJ: Rowman & Al- lanheld. 10 The San Francisco Redevelopment Agency (SFRA) was established in 1948, pursuant to the California Community Redevelopment Law. A separate entity from the City and County of San Francisco, the SFRA’s powers, such as the right to condemn properties, use tax increment financing, and authorize land use within redevelopment project areas, derive from state law. Before the state’s elimination of redevelopment agencies on February 1, 2012, the Agency’s mission had evolved from an urban renewal model to one focused on affordable housing, economic development and improving the quality of life through development of social infrastructure, parks, and cultural facilities. 11 The urban renewal plans developed prior to 1976 resulted in the demolition of 14,207 units, which were replaced with only 7,498 units by 2000. Senate Bill 2113, passed in 2000, provides the City with funding to replace the 6,709 units that were lost (See infra). 12 In 1965, the average San Francisco home was only $3,000 more on average than national home prices. By 1980, the average San Francisco home cost $53,000 more. Hartman (1984, p. 262). 4 13 Welch interview, July 20, 2012. Poverty & Race Research Action Council National Housing Law Project

Chart 1. Median Sale Price of 3-Bedroom House: San Francisco vs. Bay Area, 1990 - 200014

$600,000

$550,000 San Francisco $500,000

$450,000

$400,00

$350,000

$300,000 Median Sale Price Bay Area $250,000

$200,000

$150,000 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

town residential neighborhoods; the developmentS 50% Bay of the Area City’s median income. The community of “special needs housing;” maintaining the City’s housing movement also influenced the adoption of diversity by ending discrimination in housing key affordable housing policy and financing legisla- against people of color, families, people with disabil- tion, including the enactment of San Francisco’s ities and seniors; ensuring that new mixed use Rent Stabilization and Arbitration Ordinance in neighborhoods had substantial affordable housing; 1979 that now covers some 170,000 rental units.15 and advocating that the City’s foremost housing The movement also spurred the City’s inclusionary policy be to preserve and expand housing opportu- zoning ordinance that has resulted in over 1,500 nities for low income families living in the City. units of permanently affordable ownership and rental housing and the jobs-housing linkage pro- The housing and community development corpora- gram, which has contributed to the development of tions formed during this period would, by 2012, another 1,100 units. The more than 200,000 units develop or rehabilitate and preserve more than of “price controlled” housing constitute approxi- 26,000 permanently affordable housing units, mately 53% of San Francisco’s entire housing mainly for families and seniors earning less than stock.16

______14 Bay Area Economics (2002). San Francisco Housing Data Book. Study commissioned by San Francisco Board of Supervisors (p. 66). 15 See the discussion below under “Rent Control and Condominium Conversions” for more detail on the Rent Stabilization and Arbitra- tion Ordinance. 16 Includes new construction, acquisition and rehabilitation of existing stock, residential hotel units, and federally-assisted (public housing, Section 8 vouchers, project-based Section 8). Welch (2011); San Francisco Budget and Legislative Analyst (2012). Performance and Audit of San Francisco’s Affordable Housing Policies and Programs. Prepared for Board of Supervisors for the City and County of San Francisco; Housing Element: Part I: Data and Needs Analysis (Mar. 2011). Adopted by San Francisco Planning Commission; U.S. Census. 5 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

III. Financing Affordable Housing: Where Do We Get the Money?

Producing affordable housing in what is often the housing financing shrink, local funding initiatives most expensive housing market in the nation obvi- and sources become even more critical. This section ously takes substantial financial resources. In San reviews some of the more significant victories and Francisco, affordable housing is primarily produced unique sources of revenue that have been procured by three sectors: non-profit housing developers who for affordable housing and community develop- are funded in part by the (former) San Francisco ment in San Francisco. Redevelopment Agency and the Mayor’s Office of Housing; the San Francisco Housing Authority Community Development Block (through the HOPE VI and HOPE SF programs); Grant Program and market-rate developers operating in accordance with the inclusionary housing program or the jobs- Prior to 1979, there were no state, local, or locally- housing linkage program. The City’s development controlled federal funding sources for affordable capacity has expanded over time. Spurred on by, housing and only limited options for community- and in partnership with, nonprofit developers and based developers through the existing federal pro- 18 housing advocates, the City has implemented grams. While several of the new community-based revenue strategies that have provided significant nonprofit developers had developed senior and dis- funding for the preservation, rehabilitation and abled housing under the Department of Housing development of affordable housing. Between FY and Urban Development’s (HUD’s) Section 202 2002-03 and FY 2010-11, more than $725 million program and had utilized several HUD-subsidized was applied to affordable housing from City and programs, the lack of administrative support and locally-controlled funding sources, over $356 mil- program funds made it very difficult to amass the lion from state sources and over $829 million from resources necessary to undertake the projects that federal sources, all totaling just under $2 billion developers envisioned. Although the Community dollars.17 As state and federal sources of affordable Development Block Grant (CDBG) was established

______17 Performance Audit (2012, p. ii). Primary funding sources include federal tax credits, tax increment revenues and bond proceeds from redevelopment areas, state and city affordable housing bonds, federal CDBG, HOME and HOPWA Grants and the City hotel tax. See Table 1 herein for a summary of funding by source. 18 Although the Housing and Community Development Act of 1968 set a goal of 6 million additional units for low and moderate income families over the next decade, in 1973, the Nixon administration decided to make no new commitments for subsidized housing, and, during the decade of the 1980s, the reduction of resources for new units accelerated, resulting in less than one-third the number of new units of public housing and Section 8 certificates provided in the 1970s. However, from the late 1960s through 1985, the HUD-subsidized privately-owned new production programs had yielded approximately 8,000 units in San Francisco, many of which were sponsored by churches or nonprofit developers that used these programs to construct housing in redevelopment project areas, but did not pursue other development. See generally, HUD Housing Programs: Tenants’ Rights, 3rd ed. (2004), National Housing Law Project (Ch. 1) and sources cited therein. See also, discussion of the Preservation Program under “Preservation of Federally-Funded Affordable Housing,” infra. 6 Poverty & Race Research Action Council National Housing Law Project

Table 1. City, State and Federal Financing of San Francisco’s Affordable Housing Projects: FY 2002-03 to FY 2010-11 Total Financing Percent of Source of Financing FY 2002-03 to FY 2010-11 Total

Tax Increment Revenues and Bond Proceeds $460,130,116 24% City Affordable Housing Funda $95,961,640 5% Developer Contributions and Housing Income $73,371,353 4% City Hotel Tax or Contributions in Lieu of Tax $47,623,208 2% City General Fund $30,000,000 2% Proposition A Affordable Housing Bonds $18,053,081 1% City and Local Sources $725,139,398 38% State Propositions 46 and 1C Affordable Housing Bonds $286,129,994 15% State Tax Credits $57,654,092 3% California Dept. of Housing and Community Development $8,190,000 0% California Housing Finance Agency $4,100,000 0% State Sources $356,074,086 19%* Federal Tax Credits $634,609,090 33% Federal CDBG, HOME and HOPWA Grants $194,768,626 10% Federal sources $829,377,716 43% TOTAL $1,910,591,200 100%

a Includes developer inclusionary and jobs-housing linkage fees. * difference in the total of values and total amount is due to rounding in 1974,19 San Francisco used its CDBG money to formed a coalition that filed an administrative com- fund social service organizations, with its housing plaint with HUD in 1980. As a result of that com- dollars going to government agencies rather than for plaint, HUD placed conditions on the City’s funding of community development organizations subsequent receipt of $30 million of CDBG funds, or creation of new affordable housing opportunities. tying the award to changes in San Francisco’s use of Changes to the CDBG program requirements the funds. The housing advocacy coalition success- around this time mandated that the grants target fully negotiated the annual commitment of $5 mil- lower income households, providing grounds for a lion for site acquisition and housing rehabilitation, potential legal challenge to programs failing to meet as well as administrative support of nonprofit com- this requirement. munity-based development corporations. This initial allocation became a staple of the City’s program, Believing that the City was misallocating funds that helping these entities establish themselves as sophis- should rightfully be used to fund new affordable ticated and invaluable developers and managers of housing, local community housing advocates affordable housing in San Francisco, ultimately

______19 The Housing and Community Development Act of 1974 established the Community Development Block Grant (CDBG) program, which provides entitlement grants to states and local governments to develop viable urban communities by providing decent housing and a suitable living environment, and expanding economic opportunities, primarily for low and moderate income people. 7 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

assisting in the production and rehabilitation of consistent source of funding also served to increase 26,000 units through their combined efforts.20 This the political presence and effectiveness of these organizations both in the housing production and advocacy arenas.

The coalition that formed in 1980 and won CDBG allocations to support non- Tax Increment profit community-based development cor- The California Community Redevelopment Act porations became the Council of was adopted in 1945, authorizing the creation of Community Housing Organizations redevelopment agencies. The San Francisco (CCHO), a major player in the develop- Redevelopment Agency (SFRA) was incorporated ment of affordable housing policy. in 1948 under this authority. Tax increment financ- CCHO’s membership presently consists of ing, a tool unique to redevelopment agencies, was 20 community-based nonprofit housing established by the state in 1952, with the intent that organizations and faith-based groups that the funds be reinvested in the redevelopment proj- continue to work toward building an effec- ect solely to alleviate blight.22 As discussed below, tive affordable housing policy framework after years of community outcry and lawsuits over and the establishment of adequate fund- the demolition of neighborhoods, displacement of ing for the creation of affordable housing. residents and loss of housing through urban renewal, the state responded by requiring agencies The mission of the Council of Community to allocate 20% of their tax increment revenues for Housing Organizations has remained affordable housing, creating the Low and Moderate unchanged since its founding in 1978: Income Housing Fund in 1976.23 The SFRA had “To foster the development of perma- yet to use its tax increment bonding authority, but nently affordable low-income housing in in 1989, Mayor Agnos and the Board of Supervisors San Francisco, under community control required that the SFRA adopt a new Housing and through non-speculative means of Participation Policy dedicating 50% of tax incre- ownership, with adequate provisions for ment revenue to affordable housing as a condition tenant services and empowerment.”21 of approving the Agency’s budget.24

______20 Welch (2011); “…that CDBG money... was instrumental in keeping doors open for community based organizations…. [W]ithout them being there to actually apply for the funds [that would come], the City of San Francisco would not be as competitive… They were community organizations before they became housing developers. Some of them then became successful housing developers in addition to the community development activities.” Interview with Olson Lee, July 25, 2012. Mr. Lee, now Director of the Mayor’s Office of Housing, has a long history of involvement in the City’s affordable housing policies and programs. He was Chief Financial Officer at the Mayor’s Office of Housing (MOH) at the time of the “grand bargain” (discussed infra), later became the Deputy Director for Housing of the SFRA, and has returned to lead MOH upon the demise of the SFRA. 21 Council of Community Housing Organizations website: http://www.sfccho.org/. 22 “Tax increment revenues” are the property tax increases stemming from growth in property value due to redevelopment. Redevelop- ment law permits redevelopment agencies to issue tax increment bonds. 23 AB 3674, Montoya. The bill also mandated one-for-one replacement of low income units. The impetus behind this change is discussed immediately below. 24 In addition to dedicating 50% of tax increment revenue to affordable housing, the SFRA set much deeper affordability levels than the state required (at or below 50% of AMI v. at or below 120% AMI) and longer duration of affordability restrictions than the state then 8 required. Poverty & Race Research Action Council National Housing Law Project

This “grand bargain” marked the beginning of San source for affordable housing development will be Francisco’s extraordinary commitment of local established for at least the next 30 years.28 resources to preservation and development of affordable housing and was the City’s “greatest stim- ulus for affordable housing production.”25 Since Affordable Housing and Home 1990, over $600 million of tax increment financing Ownership Opportunity Bond has contributed to the development of over 10,000 In 1996, the Council of Community Housing units of affordable housing for low- and moderate- Organizations (CCHO) planned and coordinated income families and individuals throughout San the $100 million, Proposition A, Affordable 26 Francisco. Tax increment revenues have comprised Housing Bond Campaign. In the face of potential over 50% of City and local sources for affordable federal budget cuts and other threats to local rev- housing since 2002. As a sole source of funding, enue sources, along with the ever-growing need for only the federal Low Income Housing Tax Credit affordable housing in the City, advocates convinced (LIHTC) program has provided more affordable newly-elected Mayor Brown and the Board of housing financing. Supervisors to put Proposition A on the ballot, the first general obligation bond measure in the country While tax increment has been a substantial funding and the largest such issue for affordable housing source for affordable housing in California (second ever in California. The campaign was a grassroots only to federal funding), redevelopment agencies in effort orchestrated by CCHO that achieved a two- California were dissolved in February 2012 as part thirds majority for passage. This was no small feat, of the Governor’s remedy to the State’s $25.4 billion especially considering that a “yes” vote meant an 27 budget shortfall in 2010. As discussed below, San increase in property taxes.29 Francisco is able to retain a portion of this funding to replace housing lost in the early urban renewal Proposition A authorized the City to issue $100 period and to fulfill prior binding obligations; how- million in general obligation bonds to pay for the ever, efforts are underway to approve an alternative, construction of rental housing for households with viable source of funding for affordable housing. If annual incomes at or below 60% of the AMI ($85 advocates succeed in getting voter approval for the million) and down payment assistance for first-time Housing Trust Fund, a continued strong financial home buyers with incomes up to 100% of the AMI

______25 Lee interview, July 25, 2012. 26 Every dollar the Agency has invested has resulted in over $4.70 in additional investment from other sources, including federal tax credit equity, banks, foundations, and other public programs. Housing Programs. Retrieved Sept 27, 2012 from City and County of San Francisco as Successor to the Redevelopment Agency website: http://www.sfredevelopment.org/index.aspx?page=75. 27 The San Francisco Redevelopment Agency, along with all 400 redevelopment agencies in California, was dissolved on February 1, 2012, by order of the California Supreme Court in a decision issued on December 29, 2011 (California Redevelopment Association et al. v. Ana Matosantos). The California Supreme Court upheld AB 26, which eliminated redevelopment agencies, but struck down AB 27, which would have allowed cities to agree to community remittance payments to keep their agencies in place. AB 26 provides that the City may become the successor to the Redevelopment Agency, and continue to implement “enforceable obligations” which were in place prior to the suspension—existing contracts, bonds, leases, etc.—and take title to all of the Agency’s housing and other assets. 28 See Note 2, supra, and discussion under “Future Challenges,” below, for more information. 29 Increased property taxes were necessary to pay the principle and interest on the general obligation bonds. Voter Information Pam- phlet (Nov. 5, 1996). Consolidated Presidential Election. Retrieved Sept. 27, 2012 from: http://sfpl.org/pdf/main/gic/elections/No- vember5_1996short.pdf 9 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

($15 million). Proposition A bonds leveraged other Other Local Funding Sources financing to develop 2,125 affordable rental units, As shown in Table 1, there are several other local including many supportive housing units, and 249 sources of funding from programs that include loans to first-time homebuyers. Loan repayments developer contributions from inclusionary in-lieu of subsequently became a source of funds for other development and jobs-housing linkage fees, the projects.30 City’s general fund, and a hotel tax. All of these local sources of funding were developed as a result Despite the bond program’s success, the City’s vot- of community advocacy, with CCHO playing a ers have not passed a similar affordable housing central role in the creation and adoption of many of measure since. Lessons from two failed measures, the programs.32 As a whole, local sources have con- one in 2002 and another in 2006, have been exam- tributed almost 40% of the funding used to finance ined in the effort to bring together the development San Francisco’s affordable housing development. and housing communities to craft and garner sup- This exemplifies the impact that strong local advo- port for the 30-year Housing Trust Fund on the cacy can have not just on developing housing pol- November 2012 ballot.31 icy, but also on providing the financial support necessary to put the policies into action.

______30 Performance Audit (2012, p. 10); SPUR. Proposition A - Supportive and Affordable Rental Housing and Homeownership Bond. Re- trieved Sept. 27, 2012, from SPUR website: http://www.spur.org/goodgovernment/ballotanalysis/Nov2004/propa. 31 Arroyo, Noah (July 2012). Housing Trust Fund Goes to Voters. Retrieved Sept. 27, 2012 from MissionLocal website: http://missionlocal.org/2012/07/housing-trust-fund-left-in-the-hands-of-voters/. Cote, John (October 1, 2012) Lee Aims to Expand S.F. Housing. Re- trieved October 1, 2012 from SFGate.com: http://www.sfgate.com/politics/article/Lee-looks-to-expand-housing-with-Prop-C-3907 574.php. 32 In 2002, CCHO played a central role in crafting the City’s Inclusionary Housing Ordinance; in the early 1980s, CCHO successfully advocated for the nation’s first “Office/Housing Linkage” policy, later adopted by ordinance in 1985. Council of Community Housing Organizations website: http://www.sfccho.org/about/. These additional programs are discussed infra, given their importance in formulating San Francisco’s housing policy. 10 Poverty & Race Research Action Council National Housing Law Project

IV. Evolution of Housing Policy

This section discusses the market conditions, politi- housing that was lost during the pre-1976 urban cal influences, government and community organi- renewal period. The housing policies and programs zations, and, in some cases, litigation, that shaped that developed in response to these changing eco- the current dynamic system of affordable housing nomic, demographic and political forces within production and policies in the City for each decade each decade is discussed, along with the influential beginning in the 1970s through 2010. It starts with players involved and the evolution of policies over the early struggle of San Francisco neighborhoods time. and residents in the 1970s to preserve the housing and neighborhoods that were otherwise under 1970s: Neighborhood Preserva- attack from urban renewal, spiking rents, and tion and Tenant Protection explosive development of office space and tourist accommodations. Moving into the 1980s, the focus The early struggle of San Francisco neighborhoods shifted to producing more affordable housing, both and residents was focused on preserving the housing to house the workforce that would be filing jobs in and neighborhoods that were otherwise under the new office buildings and to create affordable attack from urban renewal, spiking rents, and communities and services needed by residents. At expansion of the office and tourist sectors. The the start of the 1990s, San Francisco was recovering efforts of organizations that formed during this from the devastating 1989 Loma Prieta earthquake period led to significant changes in federal, state and working on rebuilding the lost affordable hous- and local redevelopment policies and requirements, ing stock. Preservation and development of afford- landlord tenant law, and community involvement able housing remained in the forefront of City in planning and development issues. The decade policy to counteract local development pressures, as saw resistance to displacement and gentrification, well as the shift in funding and policy priorities in opposition to urban renewal, the stirrings of grass- Washington. Obsolete land uses such as abandoned roots efforts to protect downtown residential neigh- rail yards and a decommissioned military base gave borhoods from the encroachment of tourist hotels rise to the opportunity for equitable, mixed-use and office development, and the emergence of a development that emphasized affordable housing in savvy, knowledgeable tenants’ movement and a Mission Bay and the Hunters Point Shipyard. sophisticated group of housing development organi- Finally, coming into the 2000s, the dot.com boom zations. As discussed in this section, the significant and influx of high-paid tech workers meant rents achievements during this decade included: were skyrocketing, housing was scarce and new r Rejection by the City and the State of out- housing______development was targeted toward high- moded models of early federal urban renewal wage`1 dakfas;fhouseholds. Having market rate development policies that targeted slum eradication and dis- contribute to the provision of affordable housing placed low-income residents in response to was a priority, along with replacing the affordable relentless advocacy by community and housing

11 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

organizations. Such efforts successfully pressed attack problems of urban decay and apply for grants the City and the State to require redevelopment and loans from the federal government.34 agencies to develop, preserve and revitalize new Importantly, California’s Act was initially guided by and existing housing affordable for low- and federal urban renewal programs, which had as their moderate-income households and prevent dis- purpose the elimination of unsafe and unsanitary placement, as well as influenced changes at the housing conditions and the eradication of slums.35 Federal level; Largely because of inadequate federal funds, the r Development of a Residential Hotel early redevelopment programs were ineffective. In Demolition and Conversion Ordinance in response, Congress passed the Housing Act of response to the significant loss of these afford- 1949, which established the federal urban renewal able housing units between the late 1960’s program and its strong slum clearance provisions. through the 1970’s, including the notorious The slum clearance provisions were the product of a International Hotel (I-Hotel); and coalition of two separate and conflicting groups: r Adoption of a Rent Stabilization and advocates promoting housing opportunity for low- Arbitration Ordinance in 1979 to protect exist- income persons and business-focused real estate ing tenants against excessive rent increases in interests that supported downtown commercial market rate units, along with a Condominium rejuvenation. The tension between these competing Conversion Ordinance to prevent wide-scale advocacy groups was felt with significant force in loss of the rent-controlled units through con- San Francisco, ultimately causing the City to break version to market-rate for-sale units. from the urban renewal mold. Significant victories won by the City’s housing and resident advocacy REDEVELOPMENT AND URBAN groups not only reformulated the obligations of the RENEWAL SFRA toward existing residents and affordable The San Francisco Redevelopment Agency (SFRA) housing, but also spurred some significant changes was incorporated on August 10, 1948, with its pri- to the federal urban renewal program. mary purpose being to create better urban living conditions through the removal of blight.33 It was Prior to 1976, state law did not impose a replace- authorized and organized under the provisions of ment housing obligation on redevelopment agen- the California Community Redevelopment Act of cies.36 Two redevelopment battles in San Francisco 1945, which gave cities and counties the authority were the predominant forces behind effecting to establish redevelopment agencies that could change in redevelopment requirements regarding

______33 Urban blight was then defined by economics, dilapidation of housing and social conditions - including the size of the nonwhite population. Fulbright, Leslie (July 21, 2008). Sad Chapter in Western Addition History Ending. San Francisco Chronicle. Retrieved Sept. 27, 2012 from SFGate website: http://www.sfgate.com/bayarea/article/Sad-chapter-in-Western-Addition-history-ending-3203302.php# ixzz27W2D75WW. 34 Among the powers granted to redevelopment agencies include: the authority to acquire real property, including through eminent do- main (if necessary); the authority to develop the property; the authority to sell property without bidding; the authority and obligation to relocate persons who have interest in property acquired by the agency; the authority to borrow federal and state funds and issue bonds; the authority to impose land use and development controls as part of the comprehensive plan of redevelopment. Beatty, David F., et al. (2004). Redevelopment in California, 3d Ed.(p. 2). Salt Lake City, Ut.: Publishers Book Services. 35 See Beatty, et al., (2004), for more information on the state and federal programs. 36 Senate Bill 2113. Retrieved Sept. 27, 2012, from the City and County of San Francisco as Successor to the Redevelopment Agency website: http://www.sfredevelopment.org/index.aspx?page=187. 12 Poverty & Race Research Action Council National Housing Law Project

low-income housing replacement and resident relo- The Western Addition Community Organization cation: Western Addition and Yerba Buena’s South (WACO) formed in response to the significant dis- of Market area.37 placement in Western Addition A-1 and the threat of additional displacement from the adjacent rede- One of the early redevelopment projects undertaken velopment site, Western Addition A-2.40 WACO by the SFRA was Western Addition A-1, a predom- filed a lawsuit against the SFRA and HUD, inately poor African-American and Japanese- demanding community participation in the redevel- American neighborhood located near City Hall and opment planning process, as well as replacement only minutes away from the central business dis- housing and financial assistance for the displaced.41 trict. This 1956 plan was established to eliminate The project was halted by the court in December blighted conditions and develop a Japanese trade 1968, pending a relocation plan that could be center, offices and luxury residences. As part of a approved by HUD.42 This was the first time a court longer range redevelopment plan for the City’s cen- had enjoined a redevelopment project in the 20- tral African American and Japanese ghettos, the year history of urban renewal.43 Although the pre- plan also called for expanding the street passing liminary injunction was lifted about four months through the property into a major east-west boule- later when the SFRA filed, and HUD conditionally vard, to eventually be surrounded by new develop- approved, a slightly revised relocation plan,44 this ment.38 Specifically, the initial plan called for a battle demonstrated the power of community reduction of the residential uses from 43 acres and engagement and advocacy, constituting the second 6,112 residents to 25 acres with 3,724 residents. victory for San Francisco neighborhood activists The SFRA began implementing the plan in the fighting federal programs that upset neighborhood mid-1960s and, facing little organized resistance, stability.45 Further, it forced the SFRA to monitor about 1,350 families were moved out, very few of displacement in this and future projects and whom were able to return.39 stimulated an increase in subsidized housing

______37 Hartman (1984, p. 233). 38 Hartman (1984, p. 24). 39 Hartman (1984, p. 24). The Agency received a loan of about $16.2 million from the federal government, under the U.S. Department of Housing and Urban Development’s (HUD) Loan and Grant Contract Program, to carry out all activities necessary to implement the Plan. By the completion of the project area: (1) 2,009 units of new housing, of which 33% were federally subsidized for low- and moderate-income households; (2) 162 units of new housing constructed under Owner Participation Agreements, and (3) 226 units of rehabilitated housing were developed. However, 3208 units that were demolished were not replaced. Western Addition A-1. Re- trieved Sept. 27, 2012, from City and County of San Francisco as Successor to the Redevelopment Agency website: http://www.sfredevelopment.org/index.aspx?page=64. 40 Plans for Western Addition A-2 were first presented to the public in 1964. Western Addition Community Org. v. Weaver, 294 F. Supp. 433, 435 (N.D. Ca. 1968). 41 WACO filed suit with the enlisted help of the San Francisco Neighborhood Legal Assistance Foundation (a federally funded legal services agency created in 1966), seeking an injunction against relocation, demolition, and federal funding in Western Addition A-2 pending a valid relocation plan. Hartman (1984, p. 73). 42 Western Addition Community Org. v. Weaver, 294 F. Supp. 433 (N.D. Ca. 1968). 43 Hartman (1984, p. 74). See Chester W. Hartman, Relocation: Illusory Promises and No Relief, 57 Univ. of Va. Law Review 756, 756- 69 (1971). 44 Hartman (1984, p. 74). 45 In October 1964, in the famous San Francisco Freeway Revolt, a community movement convinced the Board of Supervisors to reject the Federal Highway Administration’s plan to build a freeway through Golden Gate Park. 13 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

construction, as discussed further, below.46 However, Owners in Opposition to Redevelopment (TOOR) while the SFRA replaced in excess of the 3,216 and contested the loss of blue-collar jobs to white- units demolished by redevelopment activities, the collar office jobs, as well as the loss of affordable City’s African American community has never housing for residents. In 1969, represented by San recovered from the destruction of the neighborhood Francisco Neighborhood Legal Assistance Fund and and its small business community and its role as a the National Housing Law Project, TOOR filed cultural center.47 suit against the SFRA, seeking an adequate relocation plan for residents and businesses in the South On the heels of the Western Addition A-2 lawsuit of Market area.49 After several failed settlement was another lawsuit, this time by residents in the attempts, the court halted all demolition and reloca- South of Market area who were affected by a pro- tion activities.50 The SFRA appealed this decision posed redevelopment called Yerba Buena. The origi- and court battles ensued until a settlement was nal plan, conceived in 1954, called for a convention reached in 1973, giving TOOR and its community center, sports stadium, high-rise office building and based development arm, Tenants and Owners large parking garage.48 This development was in the Development Corporation (TODCO),51 four sites path of the proposed expansion of the downtown in Yerba Buena Center for 400 units of new hous- financial district and threatened some 4,000 resi- ing to replace demolished residential hotels, along dents (mostly of residential hotels) and 700 small with City Hotel Tax funds to finance their develop- businesses. Demolition and the consequential dis- ment.52 This was in addition to the SFRA’s commit- placement of residents began in 1966. The commu- ment to provide another 1,500 units of low-income nity quickly gathered to form the Tenants and replacement housing.53

______46 DeLeon , Richard E. (1992). Left Coast City: Progressive Politics in San Francisco, 1975-1991 (p. 46). Univ. Press of Kansas. 47 See Appendix 1. 48 DeLeon (1992, p. 46) 49 Rubin, Gayle (1997). The Miracle Mile, South of Market and Gay Male Leather 1962-1997. In Reclaiming San Francisco: History, Politics, Culture. San Francisco, Ca: City Lights Books (1998). Retrieved Sept. 27, 2012 from FoundSF website: http://foundsf.org/index.php?title=Redevelopment. 50 Hartman (1984 p. 78). 51 TODCO was incorporated by TOOR in 1971 to build replacement housing for residential hotels demolished by the Yerba Buena redevelopment project. The idea of neighborhood-based housing development organizations – instead of public housing and church groups – was new, and TODCO was only the second San Francisco “community-based housing development corporation” (other than Mission Housing Development Corporation founded as part of the Model Cities Program). TODCO’s influence has since extended to multiple city locations through redevelopment, advocacy, provision of community facilities and affordable housing development. Retrieved Sept. 27, 2012, from TODCO website: http://www.todco.org/timeline.html. 52 TODCO website: http://www.todco.org/timeline.html; Hartman (1984, pp. 113-115). 53 Hartman (1984, p. 114).

14 Poverty & Race Research Action Council National Housing Law Project

These lawsuits resulted in significant federal and local changes in redevelopment practices and poli- The affordable housing requirements won cies. The Western Addition lawsuit, in particular, in Yerba Buena resulted in a larger boost eventually resulted in the Uniform Relocation to affordable housing in San Francisco Assistance and Real Property Acquisition Act of than the original settlement offer indi- 1970, requiring federally funded projects to ensure that adequate relocation assistance and other protec- cated.54 First, the City Hotel Tax, initially set tions are available for displaced persons.58 By 1976, to expire with the completion of the four California adopted its own statute imposing reloca- TOOR housing sites, was made perma- tion plan requirements on redevelopment agencies, nent through continuing advocacy by mandating one-for-one replacement of any TODCO and has since provided almost destroyed dwelling units occupied by low- and mod- $50 million for development of affordable erate-income families in redeveloped areas, giving housing for seniors and persons with dis- occupancy preference to displaced residents in such abilities throughout San Francisco. low- and moderate-income units, requiring 20% of Second, TODCO has also developed over the housing created in redevelopment project areas 700 affordable senior housing units on its to be affordable to low- and moderate-income people, and mandating creation of Project Area four Yerba Buena sites, which were initially Committees before adoption of a redevelopment intended for only 400 units.55 Finally, out plan.59 To help fund the housing requirements, rede- of the SFRA commitment to provide velopment agencies were also required to set aside 1,500 units of low-income housing, about 20% of tax increment to increase and improve 1,661 replacement units were procured, affordable housing for low- and moderate-income comprised primarily of rehabilitated rooms persons. The SFRA expanded the state redevelop- and apartments in the Tenderloin, South ment requirements in its Housing Participation of Market and Mission neighborhoods.56 Policy of 1990 by establishing guidelines for inclu- In total, of the approximately 2,500 resi- sion of low- and moderate-units in new residential dential units at Yerba Buena, over 1,400 developments in all redevelopment project areas; outlining inclusionary housing requirements of are for low- to moderate-income house- between 20 and 40%; deepening the affordability; holds. The development also incorporates and allocating up to 50% of tax increment monies a 257-unit SRO complex (constructed in to fund affordable housing in the City. Additional March 1997) and a 500-unit rental devel- state law changes in 2002 extended the period of opment in which 20% of the units are affordability for rental units from 15 to 55 years and affordable to very-low-income tenants.57 from 10 to 45 years for affordable owner units; increased targeting of housing assistance toward

______54 However, 3217 of the units existing at the start of the project were not replaced. 55 TODCO website: http://www.todco.org/timeline.html. 56 Hartman (1984, p. 114). 57 Yerba Buena Center. Retrieved Sept. 27, 2012, from City and County of San Francisco as Successor to Redevelopment Agency website: http://www.sfredevelopment.org/index.aspx?page=190. 58 Western Addition A-1. Retrieved Sept. 27, 2012, from City and County of San Francisco as Successor to Redevelopment Agency website: http://www.sfredevelopment.org/index.aspx?page=64. 15 59 California Health and Safety Code §§ 33410-33418. From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

Table 2. Comparison of California and San Francisco Redevelopment Agency Requirements

International Hotel Senior Housing State of California SFRA Affordable Housing Unit replacement requirement One-for-one One-for-one Chinatown/North Beach Term of Affordability for units assisted 55 years (rental); 55 years (rental); with tax increment monies 45 years (owner) 45 years (owner) Inclusionary requirement 15% (non-agency developed) 20% to 40% International Hotel Senior Housing is the 30% (agency developed) culmination of the 36 year struggle over the Occupancy Preference to displaced residents Yes Yes International Hotel. The building contains % Tax Increment dedicated to Housing 20% Up to 50% 104 studio and 1 bedroom units of HUD 202 Residential condemnation powers Yes No housing and offers many amenities for residents, including a daily nutrition/activities program and a ground floor Cultural Center families with children and households of very low- Mendelsohn House operated by the Manilatown Heritage Foun- and low-income; and made the inclusionary require- dation. The building features design ele- ments permanent and extended their applicability to ments and art depicting the legacy of the I projects that were 10 or more units in size and to Hotel struggle. live/work units.60 These revisions are intended to prevent any repeat of the mistakes of urban renewal in the past by expanding the role of redevelopment agencies not only to alleviate urban blight, but also to provide affordable housing and stimulate economic growth for the betterment of local communities.61

RESIDENTIAL HOTELS Another significant struggle during this period was the fight to retain affordable residential hotel units. Residential hotel units are a significant affordable housing source for low-income elderly, disabled and formerly homeless persons. In 1980, the City adopted a Residential Hotel Demolition and Conversion Ordinance to stave the significant loss of these affordable housing units that had occurred during the late 1960s through the 1970s. Three significant events in particular led to this ordinance. First, four dozen hotels containing approximately 3,200 rooms were demolished as part of the Yerba

______60 Memorandum to Agency Commissioners (Sept. 2, 2008). Retrieved from City and County of San Francisco as Successor to Redevel- opment Agency website: http://www.sfredevelopment.org/ftp/archive/sfarchive.org/index9f7a.html?dept=1051&sub=&dtype= 3456&year=7344&file=87282. 61 Since 1989, the SFRA has been the City’s main provider of local funding for affordable housing subsidies. See III. Financing Afford- 16 able Housing – Tax Increment, supra, for more information. Poverty & Race Research Action Council National Housing Law Project

Buena redevelopment, leaving the remaining stock fund.66 The ordinance was strengthened in 1990 by primarily in the Chinatown62 and Tenderloin dis- increasing the amount of the fee and giving neigh- tricts.63 Second, a small area adjacent to Chinatown, borhood nonprofits legal standing to enforce it.67 Manilatown, lost the International Hotel (I-Hotel), a 184-room residential hotel renting at $50 per In the early 1970’s, at least 4,000 units were demol- month, primarily to Filipino and Chinese seniors, ished through redevelopment.68 Between 1975 and which culminated into one of the most dramatic 1981, San Francisco lost another approximately battles of the rising housing movement. (See sidebar 5,000 units, or an average of over 800 units per story, p.18). Upon the loss of the I-Hotel, it became year, to demolition, fire or conversion.69 After the readily apparent to the City that this form of hous- Residential Hotel Demolition and Conversion ing was in severe shortage when the displaced resi- Ordinance took effect, losses averaged only about dents were presented with options either much more 50 units per year through 1989. After the ordinance expensive or in much worse condition than the I- was strengthened in 1990, losses averaged about 82 Hotel itself.64 The third event was the fight to pre- units per year through 2007, primarily due to fire, vent the loss of over 15,000 residential hotel units in some to demolition, but none due to conversion. the downtown Tenderloin district, primarily through All units lost since the year 2000 are slated to be conversion for use as luxury rooms for tourists or for replaced or have already been replaced by perma- sale as high-end condominiums.65 The 1980 nently affordable units. In total, San Francisco has Residential Hotel Demolition and Conversion about 500 residential hotels with 19,120 rooms, Ordinance banned demolition and conversion of about one-fourth of which are maintained with a residential hotel units absent payment of an in lieu guaranteed level of affordability and, in some cases, fee to the City’s affordable housing replacement related supportive services for residents.70

______62 As of the early-1980s, almost one-half of the approximately 10,000 housing units in Chinatown were in residential hotels. Hartman (1984, p. 251). 63 Hartman (1984, p. 251). 64 Habal, Estella (2007). San Francisco’s International Hotel: Mobilizing the Filipino American Community in the Anti-Eviction Movement (pp. 167-69). Philadelphia, Pa: Temple University Press. 65 Hartman (1984, p. 252). The organization of Tenderloin tenants, aside from spurring the Ordinance, resulted in rezoning the area in 1985 to prohibit new tourist hotels, as well as a significant mitigation package from existing proposed hotel development, including: a fee of $0.50 per hotel room rented, to be set aside for low-income housing development, amounting to approximately $320,000 per year for 20 years; a contribution of $200,000 from each hotel for community service projects; and hotel sponsorship of a $4,000,000 grant for the acquisition and renovation of four low-cost residential hotels for the city, a total of 474 total units. SROs in San Francisco. Retrieved Sept. 27, 2012, from Central City SRO Collaborative website: http://www.ccsro.org/pages/history.htm (citing Shaw, Randy (1996). The Activist’s Handbook (p. 11). Berkeley, Ca: Univ. of California Press). 66 The 1981 ordinance required permits for conversion of residential hotel rooms to commercial use, imposing a strong replacement provision, and mandating that 80% of the replacement cost be provided to the City in the case of conversion or demolition. HSA Report on SRO’s at 16-17. 67 SROs in San Francisco. Retrieved Sept. 27, 2012, from Central City SRO Collaborative website: http://www.ccsro.org/pages/history.htm. 68 Id. 69 Housing Element (2011, p. I.32). Nationally, over 1 million residential hotel units were lost during the 1970’s through mid-1980’s. San Francisco fared better than many cities, losing about 38% of its stock before 1981, compared to a 60% loss of units in New York City; a respective 64% and 59% loss of residential hotels in Denver and Portland; and a loss of all comparable properties in Chicago by 1982. Kelly, Dan (Nov. 2009). Fiscal and Policy Implications for Single Room Occupancy Hotels. Report to SF-HAS Managers/city Dept. Representatives. Retrieved from: www.sf-planning.org; Wright, James and Rubin, Beth (1997). Is Homelessness a Housing Prob- lem? In Understanding Homelessness: New Policy and Research Perspectives. Washington, D.C.: Fannie Mae Foundation, at http://content.knowledgeplex.org/kp2/kp/report/report/relfiles/homeless_1997_wright.pdf. 70 Housing Element (2011, p. I.32). 17 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

The story of the International Hotel (I-Hotel) exemplifies the evolution of the housing movement in San Francisco, beginning with the destruction of low-income, minority-occupied housing, followed by inter-racial community mobilization and advocacy and, finally, redevelopment of income and racially diverse communities. The I-Hotel struggle was also a focal point in the rise of the Asian-American movement in San Francisco, bringing together residents of Manilatown, Chinatown and others to save the I-Hotel from demolition.71

The I-Hotel was a 184-room residential hotel housing low-income Chinese and Filipino seniors in Manilatown,72 an area situated between Chinatown and the expanding Financial District. In 1968, the owner of the I-Hotel sought to evict all residents so that the hotel could make way for a parking structure. At the time, the I-Hotel housed 182 people, comprised primarily of Filipino (53%), Chinese (20%) and black, Latino or white (27%) seniors.73 Neighborhood, ethnic and church groups rallied to prevent the evictions, with demonstrations numbering up to 5,000 people.74 After a long fight, the residents were ultimately evicted in 1977 and the I-Hotel was demolished in 1979.75 Community activists continued to battle for nearly 20 years to have affordable housing replace the torn-down hotel, instead of the office high-rise planned by developers. Finally, in 1994, the property was purchased by the Roman Catholic archdiocese of San Francisco, which agreed to sell the air rights for development of the I-Hotel senior community to the Chinatown Community Housing Corporation (now Chinatown Community Development Center). With assistance of an $8.3 million Section 202 grant from HUD to develop the site for low-income senior housing and $8.7 million from the San Francisco Mayor’s Office of Housing, the new International Hotel was developed.76 The first residents moved into the 104-unit building in 2005, mostly from Chinatown, with the two remaining living residents of the original I-Hotel given priority occupancy.77 Also occupying the ground floor of the new 15-story hotel is the International Hotel Manilatown Center, with a goal to keep alive the memory of the anti-eviction movement, the original I-Hotel and the Manilatown neighborhood.78

______71 Habel (2007, pp. 2-3). 72 Habel (2007, p. 34). The I-Hotel was a low-cost residential hotel built in 1907 in the Manilatown neighborhood. Manilatown was home to thousands of seasonal Asian agricultural and cannery laborers and retired war veterans during the 1910’s to the 1970’s. By the late 1970’s, the I-Hotel was almost all that was left of Manilatown. Habel (2007, p. 4), 73 Habel (2007, pp. 33-34). 74 Hartman (1984, p. 234). 75 Most of the residents, many of whom were in their 60’s and 70’s, relocated to homes in the South of Market area. Habel (2007, p. 167). 76 Habel (2007, pp. xix, 172). International Hotel Senior Housing, Inc., and Chinatown Community Development Center (formerly Chi- natown Community Housing Corporation) partnered to complete the development. Retrieved Sept. 27, 2012, from website: http://www.chinatowncdc.org/index.php?option=com_content&view=article&id=113&Itemid=380. 77 Habel (2007, p. 174). 18 78 Habel (2007, p. 184). Poverty & Race Research Action Council National Housing Law Project

RENT CONTROL AND CONDOMINIUM CONVERSIONS San Francisco, a city of renters, consists of approximately 65% renters and 35% owners, the reverse of prevailing Concurrent with community efforts to restrain urban renewal and to protect patterns nationwide. Its housing stock is approximately the residential hotel stock, tenant one-third single family homes, one-third units in buildings activists citywide became increasingly containing 1 to 4 units, and one-third units in larger concerned about the soaring costs of apartment buildings. The demand for more ownership privately-owned rental housing and the units inevitably led to conversion of the rental stock since threats to the rental housing stock. As unit conversion was generally cheaper and easier than the decade came to a close, they were developing new condominiums and development of new instrumental in the passage of ordinances to combat escalating housing single family homes was virtually impossible. Between costs and control the conversion of 1970 and 2000, almost 9,000 low-rent apartments80 rental housing to condominiums in were demolished or converted to condominiums. response to the influx of office workers into San Francisco. The rise in gas prices in the early 1970s rejuvenated interest Tenant advocacy was responsible for the passage of among workers in San Francisco to leave the sub- two key ordinances designed to mitigate the urbs and move back into the City. The development decreasing supply and rising cost of rental apart- philosophy of the time, focused on office and com- ments in the City. First, the San Francisco mercial development over residential development, Residential Rent Stabilization Ordinance (Rent meant that condominium conversion of existing Ordinance) was enacted on June 13, 1979, to pro- apartment units became a rapidly rising trend to tect existing tenants against excessive rent increases meet the ownership housing demand from this and prevent evictions without just cause.81 The higher income population. The combination of the Ordinance applies to most rental units built before loss of rentals to condominium conversion and June 1979 and limits the amount that rents may influx of higher income renters to the City drasti- increase each year that the tenant occupies the unit cally reduced rental vacancy rates79 and increased and the reasons for which a tenant may be evicted. market rents.

______79 As of 1969, the rental vacancy rate was a dismally low 1.1%. Housing Element (2011); Habel (2007, p. 48). 80 SROs in San Francisco. Retrieved Sept. 27, 2012, from Central City SRO Collaborative website: http://www.ccsro.org/pages/history.htm. 81 The Rent Ordinance has been amended 20 times, several times by ballot measures. Most of the amendments toughen the law and strengthen housing security for tenants. For example, amendments have limited owner move-in evictions, required relocation payments to tenants, reduced the types of housing exempt from coverage by the ordinance, and established that foreclosure is not “just cause” for eviction. Residential Rent Stabilization and Arbitration Ordinance, Chapter 37 of the San Francisco Administrative Code. 19 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

Landlords are unrestricted in the amount of rent nance originally limited the number of rental units they can charge once a change-over in tenants that could be converted to no more than 1,000 occurs (called vacancy decontrol), but must again annually. This was changed within a few years to follow the same regulations for annual rent increases permit a maximum of 200 conversions per year and and just cause for eviction for that new tenant. allow only smaller buildings containing between Although the number of rent controlled units con- two and six units to apply for conversion.84 The tinues to decline, particularly in smaller two-unit objective of the limit on the size of eligible com- buildings that are not subject to condominium con- plexes was to retain the larger occupied rental prop- version controls, approximately 170,000 rental erties for their original intent as rental housing; in units, or over 70% of the City’s rental stock, are essence helping to protect what were now rent con- protected by rent control.82 This ordinance fills a trolled units.85 Additional tenant protections unique niche by helping to retain a large number of included the tenant’s right to purchase the unit units available to low-, moderate- and middle- upon conversion or renew their lease for up to one income households in the City. year, as well as receive relocation expenses.86 Further, units that were part of the City’s low- and Second, the Condominium Conversion Ordinance moderate-housing stock and that were converted was adopted in 1979 “[t]o preserve a reasonable bal- between 1979 and 1988 were required to be set ance of ownership and rental housing within the aside as below market units and continue to be City and County of San Francisco.”83 The ordi- offered at below market rates to households of low

______82 Housing Element (2011, p. A.14); 2010 U.S. Census. The Ordinance was created in part to increase equity so fixed-income households (E.g., elderly), struggling families, or minorities were not forced to leave the City because of excessive rent increases. Renters comprise 65% of residents and a majority of the electorate, meaning they have a huge impact on government officials’ decisions, adding to the strength of the program. 83 S.F. Mun. Code, § 1302(c)(1); see Leavenworth Properties v. San Francisco, 189 Cal.App.3d 986, 992 (1987). 84 Two-unit buildings in which at least one unit has been continuously occupied for at least three years by an applicant owner are exempt from the lottery. Three to six unit buildings may convert if at least 50% of the units are similarly occupied, if the applicant owners win the annual conversion lottery, meet occupancy requirements and satisfy tenants’ rights rules (including relocation) and the City’s tenant protection legislation. San Francisco Subdivision Code, Art. 9 Conversions. Since its adoption, the ordinance, like the Rent Ordi- nance, has been the subject of much litigation and has been amended numerous times, each time strengthening the tenant protections. It has also been subject to almost continual attacks from owners seeking to avoid rent control and the real estate industry seeking to convert more of the housing stock from rental to ownership. Many apartments that were unable to convert have been sold as tenancy-in-common (TIC) units to multiple owners, essentially removing them from the rental stock. TIC owners frequently apply to convert these units to condominiums once they have fulfilled the conversion requirements. Recent attacks have come from tenancy- in-common owners, which is understandable given that owners can demand a higher price on the market if units are sold as condominiums. See, e.g., Gallagher, Mary. Tenants in Common Disadvantages. San Francisco Chronicle. Retrieved Sept. 27, 2012, from SFGate website: http://homeguides.sfgate.com/tenants-common-disadvantages-6821.html; Supervisors offer new plan to allow more condo conversions. Retrieved Sept. 27, 2012, from SFGate website: http://blog.sfgate.com/cityinsider/2012/06/11/supervisors-offer- new-plan-to-allow-more-condo-conversions/. 85 Analysis of total condominium units in the City as of the 1980 Census (6,258 units) showed that about 50% were either renter-occupied (1,863) or vacant (1,064), indicating a high percentage were being retained for investment housing and not contributing to ownership opportunities in the City. The loss of rental units in a market where vacancy rates remained below 3% to provide investment rather than resident purchase opportunities was seen as a detriment to housing objectives, supporting a change in the conversion ordinance. Gellen, Martin, et al. (July 2004). Promoting Homeownership Through Condominium Conversion (pp. 3-4). SPUR. Retrieved Sept. 27, 2012, from SPUR website: http://www.spur.org/publications/library/report/promotinghomeownershipthroughcon- dominiumconversion_090704. 86 Gellen (2004, p. 3); Housing Element: Part II: Objectives, Policies and Implementation Programs (2004, Policy 2.3). Adopted by San 20 Francisco Planning Commission. Poverty & Race Research Action Council National Housing Law Project

or moderate income.87 While this ordinance has Also, with the demise of the federal urban renewal prevented the conversion of larger properties and programs in 1974, the rise of the tenants and neigh- limited the conversion of two to six unit properties, borhood preservation movements, and the new about 2,296 units were lost between 1999 and 2007 one-for-one replacement obligations imposed by to conversion in owner-occupied, two-unit build- the state, the SFRA slowly began its transformation ings, which are not regulated by the ordinance.88 to a new mission, one focused on housing develop- The ordinance restricts only conversion of existing ment and preservation and neighborhood revitaliza- rental properties; it places no restriction on the tion without displacement. development of new condominium units. Since this ordinance has been adopted, virtually all new pri- At decade’s end, the housing movement had grown vate, market-rate multifamily units constructed and matured. Tenant activists had won significant have been condominiums, even when the initial victories. Low income neighborhoods began organ- intent has been to operate the development as a izing to prevent commercialization and displace- rental complex. ment and community organizations began to realize that simply preserving existing affordable housing was not enough to serve resident needs; rather, SHIFTS IN DEVELOPMENT development of new community-controlled afford- PERSPECTIVES AND FUNDING able housing was critical. It also became apparent OPPORTUNITIES that as families change and residents age in place, Additional changes in the late 1970s influenced the additional services are needed, such as child care, policies and programs that would develop in the senior living facilities, and other neighborhood next decade. The 1978 passage of Proposition 1389 infrastructure. In other words, to ensure continued, limited the annual real estate tax on a parcel of thriving neighborhoods, the focus on housing property to 1% of its assessed value and limited needed to expand to “developing communities.” annual increases in assessed value to 2% per year, until and unless the property has a change of own- Housing activists turned their attention to two ership. San Francisco already had booming office challenges: identifying funding sources for housing development and passage of Proposition 13 created development and preservation and applying incentives for it to encourage commercial and retail environmental and land use law to protect over residential development due to the increased neighborhoods and participate in the broader tax revenues such development generates.90 development policy arena.

______87 Condo Conversion BMR Program. Retrieved Sept. 27, 2012, from Mayor’s Office of Housing website: http://sf- moh.org/index.aspx?page=257. 88 Housing Element (2011, p. A-16). 89 Ca. Const., Art. 13A. 90 In response to the almost 60% reduction in property tax revenues to all local governments and redevelopment agencies that occurred after passage of Proposition 13, the number of established redevelopment agencies doubled to try to fill the gap in financing for capital projects, particularly public improvements. Beatty (2004, p. 7); Schuk, Carolyn (2011). Redevelopment Agencies 101. Retrieved Sept. 27, 2012, from Santa Clara Weekly website: http://www.santaclaraweekly.com/2011/Issue-7/redevelopment.html. Redevelop- ment agencies, cities and counties also competed for the sales tax revenue resulting from retail development, as Proposition 13 made sales tax a key component of a locality’s revenue. Proposition 13 caused what has been called the “fiscalization of land use” in Cali- fornia, where land use decisions are made locally. 21 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

1980s: Equitable Development, r Passage by voters of a groundbreaking ballot Neighborhood Preservation, and measure in 1986 (Proposition M), which New Resources capped the amount of office development that could be approved each year and established The 1980s began with the newly organized planning priorities that incorporated the devel- neighborhood-based nonprofit developers winning a opment and preservation of affordable housing significant victory in redirecting the City’s CDBG in the General Plan;94 and grant91 and the tenants’ movement achieving passage r Organization of residents within “ring neigh- of the condominium conversion law. The City borhoods,” those circling the downtown finan- adopted its first redevelopment plan in more than a cial district, whose advocacy led to prohibitions decade, the Rincon-Point South Beach Plan in 1981, on the demolition of housing units in the after a four-year community planning process.92 downtown area without conditional use With office development still booming, activists approval and creation of community-based became knowledgeable about environmental and neighborhood plans to protect the residential land use law and began using land use public hear- nature of these neighborhoods. ings and procedures to demand exactions from office development to mitigate the affordable housing GENERATING HOUSING FROM 93 demand generated by the development. Important OFFICE DEVELOPMENT achievements discussed in this section include: In 1981, using the analytical methodology and con- r Adoption of the Office Housing Production cept of “mitigation” taken from environmental law, Program in 1981 by the Department of City housing and environmental advocates persuaded the Planning, and codification of the policy in Department of City Planning to adopt the Office 1985, requiring developers of large office build- Housing Production Program to mitigate the hous- ings to develop affordable housing or pay an in ing demand generated by new office development. lieu fee to mitigate the housing demand gener- The developers of large office buildings were ated by new workers, along with legislation required to develop affordable housing or pay an in requiring linkage fees for other resident services, lieu fee calculated on the expected number of new such as child care;

______91 See III. Financing Affordable Housing, supra. 92 Rincon Point-South Beach is a 115-acre redevelopment project composed of two non-contiguous geographic areas along San Fran- cisco’s northeastern waterfront. Demonstrating the City’s economic transformation, much of the area was formerly characterized by dilapidated warehouses, open cargo storage yards, abandoned or underutilized buildings, several piers in unsound condition and an extensive network of underutilized street rights-of-way. Since 1981, the area has been transformed into a new mixed-use, waterfront development. More than 2,800 residential units have been developed, with 24% of the units set aside for low- and moderate-income households, over 1.2 million square feet of commercial space has been constructed, as well as the historic rehabilitation and commercial reuse of five buildings a 700-berth harbor, two public parks, and a waterfront baseball park. No housing was demolished in this project area. 93 A laboratory for community involvement in land use was the Mission Bay Development, a 320 acre parcel, formerly rail yards, that was owned by Santa Fe Pacific Realty. Mission Bay had been slated for development since 1982, and in 1984, negotiations began on a somewhat scaled back plan. Numerous groups, energized by the passage of Prop M, coalesced under the umbrella of the Mission Bay Clearinghouse to address issues of housing affordability, traffic and transit, open space, environmental clean-up and jobs/housing balance. The plan that emerged from five years of negotiations, extensive public hearings, and a community victory at the ballot box, had unprecedented housing and community benefits and was approved by the Board of Supervisors in February 1991. 94 Downtown Plan, General Plan of the City and County of San Francisco, Department of City Planning, retrieved from http://www.sf- 22 planning.org/ftp/General_Plan/Downtown.htm on October 5, 2012. See also , San Francisco Planning Code. Poverty & Race Research Action Council National Housing Law Project

employees generated by the office development.95 adequately address these issues, spurred the commu- This was the first program of its kind in the United nity to go to the ballot with Proposition M, a bind- States. The program was formalized into an ordi- ing office space growth limitation. Proposition M nance in 1985, requiring construction or contribu- was approved by the voters in 1986. Through this tion of land or in lieu fees to provide 386 units per path-breaking measure, San Francisco effectively million square feet of office development.96 In con- limited the amount of office development that junction with this program, legislation was adopted could be approved each year to no more than instituting office linkage fees for other resident serv- 475,000 square feet and created a competitive ices, including child care, open space, parks, trans- process among developers looking to construct portation and public art.97 The ordinance has since office projects.102 Proposition M also established been modified in 199098 and 1999. In 2001, it was several priority policies to be incorporated into the expanded to include all types of commercial devel- City’s General Plan,103 including preserving and opment and was renamed the Jobs-Housing enhancing existing neighborhood retail uses and Linkage Program.99 opportunities for resident employment and ownership; preserving existing housing and neighborhood About the time that the office linkage ordinance character; preserving and enhancing the city’s was adopted, the continued high rate of office affordable housing; maintaining a diverse economic development,100 high office vacancy rates,101 the base by protecting the industrial and service sectors adverse impact of commercial development on local from displacement due to commercial office devel- communities, and the Downtown Plan’s failure to opment; and protecting parks and open space from

______95 DeLeon (1992, p. 60). 96 Starkie, Edward (1991). Office Development Linkage in San Francisco: Exacting the Social Costs of Growth (p. 44). Submitted to Cen- ter for Real Estate Development, Mass. Inst. of Technology. 97 Starkie(1991, p. 46). 98 The original OHPP affected only those buildings 50,000 square feet or larger. Perhaps not surprisingly, the Planning Department began receiving a raft of applications for buildings 49,999 sq. ft., nicknamed “the Forty-Niners” by activists. In response, the activists successfully advocated for an amendment to cover buildings 25,000 square feet or larger. 99 Housing Element (2011, p. A.5). The job housing linkage fee imposes, with some exemptions, affordable housing requirements upon entertainment, hotel, office, research, and retail development projects proposing a net addition of 25,000 or more square feet throughout the City. Performance Audit (2012, p. 9). 100 New office development averaged about 1.7 million square feet per year between 1965 and 1985. San Francisco Planning Depart- ment (June 2011). 25-Years: Downtown Plan Monitoring Report: 1985-2009. Appendix B, Table 1. 101 Office vacancy rates were near 15% on average and 18% for Class A space in the 1980s. San Francisco Planning Department (2004). Downtown Plan Monitoring Report (p. 16); DeLeon (1992, p. 54). See Chart 3. 102 Downtown Plan Monitoring Report (2004, p. 10). The Downtown Plan limited approvals to no more than 950,000 square feet per year. To mitigate past approvals to this limit (and make the limit retroactive to developments approved between 1984 and 1986), Proposition M permitted only 475,000 square feet in new approvals through about 1998/1999. Office development is presently limited by the Downtown Plan to 950,000 square feet. Since the implementation of office limit controls, the annual average amount of new office space approved has dropped to about 788,000 square feet. Between 1986 and 2009, the year 2000 is the only year in which approvals were sought for more space than the limits would allow. San Francisco Planning Department (June 2011). 25-Years: Downtown Plan Monitoring Report: 1985-2009. See Chart 2. The annual competition, known as the “Beauty Contest,” caused developers to “sweeten the deal” to engender support, putting activists in the enviable position of leveraging better designs, stronger job training and disadvantaged contractor commitments, and more affordable housing. 103 State law requires that the General Plan address seven issues: land use, circulation, housing, conservation, open space, noise and safety. Adopted by the Planning Commission and approved by the Board of Supervisors, the General Plan is San Francisco’s guiding document for development and embodies the community’s vision for the future of San Francisco. Introduction to General Plan (2011), at http://www.sf-planning.org/ftp/General_Plan/index.htm. 23 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

development.104 To partially meet the demand for income. Because office properties could not be filled new office jobs created, the Plan sought to build with tenants due to over-supply, and investors were between 1,000 and 1,500 new housing units city- limited in being able to write-off the loss, within wide each year, quite a shift from the commercial just a few years, the speculative development of focus in the 1970s.105 These policies evinced the office space in San Francisco significantly declined. movement of the community organizations to focus While this resulted in relatively little activity from on community development and maintenance of the office linkage program until the market picked services to residents in addition to preserving and up again in the mid to late 1990s,106 more than $72 providing affordable housing. million in affordable housing fees have been collected through this program since 1985, contribut- Interestingly, in this same year, the United States tax ing to the development of more than 1,100 code underwent a significant change whereby real affordable housing units.107 estate losses could no longer be used to offset other

Chart 2. Square Feet of Office Development: San Francisco, 1986 through 2009108

3,500,000

3,000,000

2,500,000

2,000,000

1,500,000

1,000,000 Square Feet of Office Development 500000

0 8 0 2 4 0 7 9 3 5 9

87 88 89 9 91 93 9 9 9 0 01 0 0 0 0

986 9 9 9 9 9 992 9 994 995 996 9 9 9 0 0 0 0 0 006 008 0

1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 200 2 2007 2 2

______104 Introduction to General Plan (2011). 105 Housing production in San Francisco averaged over 1,670 units annually between 1985 and 2009, exceeding the Downtown Plan’s goal for new housing construction, and of the over 21,680 units produced in downtown during this period, 39% were in redevelopment areas and 18% were affordable. 25-Years: Downtown Plan Monitoring Report: 1985-2009 (2011, p. 12). 106 Id., Appendix B, Table 6. Job-Housing Linkage Funds Collected. 107 Downtown Plan: Annual Monitoring Report 2011 (2012, p. 10). Units produced are affordable to low and moderate-income households (60% through 100% AMI) and are to be affordable for at least 50 years. Downtown Plan Monitoring Report (2004, App. C., p. 25). 24 108 San Francisco Planning Department (Oct. 2009). Downtown Plan Monitoring Report, 2002-2007. Poverty & Race Research Action Council National Housing Law Project

Chart 3. Office Vacancy Rates: San Francisco, 1987 – 2004109

25%

20%

15%

10% Vacancy Rate

0% 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

The “Ring Neighborhoods” of an extraordinary provision of the Downtown Fight Back: Protecting Residential Plan: a policy and corresponding Planning Code Uses In and Adjacent To amendment that prohibits the demolition of housing units in the downtown, without condi- Downtown from Encroachment tional use approval, given only in very limited by Commercial Uses circumstances.111 The Plan also had another housing provision that allows residential uses in certain In the mid-1980s, concerned residents of the South downtown districts greater density with a condi- of Market, Chinatown/North Beach, and the tional use, provided that the units exceeding the Tenderloin (also known as the North of Market), base Floor Area Ratio (FAR) limit are affordable for engaged in community planning and organizing to twenty years.112 combat the “blowing out [of] existing residential neighborhoods in the concentric circles around Neighborhood efforts also resulted in the develop- downtown.”110 Their advocacy led to the adoption ment of community-based neighborhood plans and

______109 Downtown Plan Monitoring Report (2004). 110 Welch interview, July 20, 2012. 111 Planning Code Section 212(e) provides that all demolitions of residential buildings and conversions of residential space to non- residential uses in commercial districts be permitted only if authorized by a conditional use permit. This provision was part of the Downtown Plan text amendments, Ord. 414-85, approved 09/17/85. In 2008, Planning Code Section 317 added additional requirements and findings that the Planning Commis sion must make when considering any permit that involves the removal of a dwelling unit (Ord. 69-08, approved 04/17/08). 112 Planning Code Section 124(f). This provision was part of the Downtown Plan text amendments, Ord. 414-85, approved 09/17/85. 25 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

proposals for rezoning in Chinatown,113 North safety and housing rehabilitation, and Proposition Beach,114 and the North of Market (Tenderloin).115 84, a $285 million housing bond for homeless, While tailored to each neighborhood, these plans home purchase, rental and rehabilitation and zoning provisions generally protect existing programs.117 housing from demolition or conversion and have various measures to protect and enhance the resi- These new resources leveraged San Francisco’s local dential quality and scale of the neighborhoods. investment, making the affordable housing development boom of the 90s possible. Because of CDBG NEW RESOURCES: FEDERAL AND funding, which enabled the City’s nonprofit devel- STATE FUNDING IS ADDED TO opers to plan new projects, they were “ready to go” THE MIX and able to compete favorably and “really [take] Toward the end of the decade, changes at the fed- advantage of the [state’s] early general obligation 118 eral and state level increased affordable housing bond financing and tax increment resources…” financing opportunities. In 1986, Congress adopted Section 42 of the Internal Revenue Code, creating 1990s: Inclusive Redevelopment, the Low Income Housing Tax Credit (LIHTC) pro- the Dot.Com Boom, and Housing gram, providing private owners with an incentive to create and maintain affordable housing and becom- Preservation ing the largest source of funds for San Francisco’s The 1990s began with the housing development nonprofit developers.116 In 1988, California entered organizations coming to the aid of the City in the housing bond financing arena by passing assessing the damage to the City’s affordable hous- Proposition 77, a $150 million bond for earthquake ing stock from the 1989 Loma Prieta earthquake

______113 See Chinatown Area Plan, San Francisco General Plan, retrieved from: http://www.sf-planning.org/ftp/General_Plan/Chinatown.htm. Chinatown was studied and rezoned in 1987(Ord. 130-87, approved 04/27/87). The rezoned districts may be found in Planning Code Section 810 and work together with Section 812 controls to protect existing housing from demolition or conversion, encourage new housing and accommodate modest expansion of Chinatown business activities as well as street-level retail uses. The size of indi- vidual professional or business office space is limited to prevent encroachment of larger office uses from the financial district. Housing development in new buildings is encouraged on upper stories. 114 Controls for the North Beach and Broadway Neighborhood Commercial Districts (Planning Code Sections 714 and 722, respectively) were adopted as part of the Neighborhood Commercial Rezoning (Ord. 69-87, approved 03/13/87) and encourage housing development above the second story. Existing housing is protected by limitations on demolitions and upper- story conversions. 115 The existing zoning was changed to high density residential with ground floor commercial and a new North of Market Residential Special Use district was created “to protect and enhance important housing resources in an area near downtown, conserve and up- grade existing low and moderate income housing stock, preserve buildings of architectural and historic importance and preserve the existing scale of development, maintain sunlight in public spaces, encourage new infill housing at a compatible density, limit the development of tourist hotels and other commercial uses that could adversely impact the residential nature of the area, and limit the number of commercial establishments which are not intended primarily for customers who are residents of the area.” The special use district generally prohibits demolition of buildings containing residential units, subject to conditional use considering the purposes of the District and the adverse impact on the public health, safety and general welfare due to the loss of existing housing stock, among other purposes. Planning Code Section 249.5, with Ord. 165-85, approved 03/28/85. 116 See Table 1. City, State and Federal Financing of San Francisco’s Affordable Housing Projects: FY 2002-03 to FY 2010-11, supra. 117 California Housing Bonds, California Department of Housing and Community Development, 2006, retrieved from http://business.ca.gov/LinkClick.aspx?fileticket=5BBQA-xO19w%3D&tabid=247. 118 Lee interview, July 25, 2012. 26 Poverty & Race Research Action Council National Housing Law Project

and engaging in housing rehabilitation work.119 The adoption of a limited inclusionary housing “great bargain” had been made between the City policy by the City; and and the SFRA and tax increment began to flow,120 r Creation of a Housing Preservation Policy to allowing the City to compete effectively for the new preserve the HUD-financed housing that was federal and state affordable housing resources. at risk of being lost. Pressure from the rising dot.com boom increased the demand for housing and office space, drastically INCLUSIVE REDEVELOPMENT: reducing rental and office vacancy rates and increas- THIS IS NOT YOUR GRANDFATHER’S ing rental rates and housing costs. In addition, REDEVELOPMENT AGENCY! budget and policy changes in Washington threatened San Francisco’s HUD-financed affordable In sharp contrast with the adjacent Yerba Buena housing stock. Programs and policies that arose in Project, the South of Market Redevelopment the face of these challenges included: Project is a small, mixed-use neighborhood plan developed in partnership with its residents, small r Adoption of new redevelopment project areas business owners and community organizations and for South of Market, Mission Bay and Hunters is intended to improve the area without gentrifica- Point Shipyard, each with affordable housing as tion and displacement. San Francisco adopted the a key component; South of Market Earthquake Recovery r Implementation of inclusionary housing as part Redevelopment Plan on June 12, 1990, in accor- of redevelopment law and policy,121 as well as dance with the newly adopted state Community Redevelopment Financial Assistance and Disaster Project provisions, enabling the Mission Creek Senior Center SFRA to repair, restore, and/or replace buildings and physical infrastructure

Westbrook Plaza

______119 In 1989, the Loma Prieta earthquake created havoc in downtown, with particular damage in the South of Market, Tenderloin and Chinatown areas. The earthquake measured 7.1 on the Richter scale and lasted only 15 seconds. Older, unreinforced masonry constructed buildings suffered the most damage, including many residential hotel units and those occupied by low- and moderate-income families. Various estimates have been made on the count of losses. One article citing City of San Francisco, 1989, “Earthquake Impact on Low and Moderate Income Housing,” Report # 4, Mayor’s Office of Housing, November 20, estimates 6,300 of rental and affordable housing units were destroyed or significantly damaged, most of which were downtown. Comerio, Mary C. (1997). Housing Repair and Reconstruction After Loma Prieta. Univ. of Ca., Berkeley, at http://nisee.berkeley.edu/loma_prieta/comerio.html. 120 See discussion, above, under III. Financing Affordable Housing, Tax Increment. 121 See discussion within this section, above, under “1970s: Neighborhood Preservation and Tenant Protection; Redevelopment and Urban Renewal” and Table 2. 27 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

damaged by the quake and to provide economic development assistance to neighborhood-serving businesses and related establishments. Housing was Between 1998 and 2005, the SFRA, in con- the mainstay of this plan. Since 1990, the SFRA sultation with the South of Market Project has provided earthquake recovery assistance to Area Committee (PAC), worked on a proposal residents and businesses and has improved housing to amend the Project Area. The Plan opportunities by funding the construction or Amendment, which was adopted in rehabilitation of more than 1,000 new affordable December 2005, converted the earthquake housing units. It has funded the construction of recovery redevelopment project into a tradi- new, widened sidewalks with new street trees and tional redevelopment project, enabling the street lights as well and has provided façade and Agency to invest $37 million dollars of tax tenant improvement loans to property owners and increment in affordable housing. A range of neighborhood-serving businesses. The agency has units has been developed, including owner- supported community nonprofits that provide ship housing by Habitat for Humanity, family health care and other services that contribute to the rental housing, rehabilitation of residential cultural identity of the area. Remarkably, the hotels, and the award-winning Plaza SFRA has done so with the active participation and Apartments, containing 100 studio units for support of the South of Market Project Area formerly homeless people with on-site medical Committee. and psychiatric services, in a LEED Silver, beautifully designed sustainable building. The The Mission Bay project was originally adopted as a development also has space for a community- development agreement with no redevelopment based theater and a credit union and other agency involvement in 1991.122 As a result of the neighborhood-serving retail.

The Plaza Apartments

______28 122 See note 93 regarding the 1991 plan. Poverty & Race Research Action Council National Housing Law Project

Mission Bay Site Plan

SFRA AFFORDABLE HOUSING SITES

MISSION BAY AFFORDABLE HOUSING N SAN FRANCISCO, CALIFORNIA | November 2005 0 300 600 severe real estate recession in the early 1990s, the administration. Housing became the economic project was stalled and, in February 1996, the engine of the new Mission Bay, and the project owner formally terminated the development agree- came under the jurisdiction of the SFRA so that tax ment. Newly elected Mayor Brown made jump- increment financing could be used for the substan- starting the development a priority for his tial infrastructure required for the project. The new

29 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

Candlestick Point Redevelopment Plan

plan included a 43 acre University of California San a diverse range of needs, and the new mixed-use Francisco medical campus; 6,000 housing units, of neighborhoods will be equipped with child care, which 1,700 would be permanently affordable on health and social services, as well as amenities such land donated by the developer; 5 million sq. ft. of as neighborhood-serving retail, parks, libraries, and commercial space; 43 acres of public space, a new schools. school, jobs and contracting provisions, and other features. It contains an unusual phasing and linkage The Hunters Point Shipyard, consisting of 500 acres formula to ensure pro rata development of the along the southeastern waterfront, was included on affordable housing. The plan was adopted unani- the Department of Defense’s 1991 Base Realignment mously by the Board of Supervisors in October and Closure (BRAC) list. In 1993, the San Francisco 1998. It has set the standard for affordable housing Board of Supervisors designated the Shipyard as a and public benefits in large scale development that Redevelopment Survey Area and, after an extensive has since been followed in the Hunters Point multi-year community planning effort, adopted the Shipyard, Treasure Island, and Transbay Plans.123 Hunters Point Naval Shipyard Redevelopment Plan Approximately one-third of the housing units will in 1997. The plan was amended in 2010 to integrate be permanently affordable and contain housing for the planning and development of an additional 280 acres owned by the City within the larger Bayview

______30 123 For more information see: http://www.sfredevelopment.org/index.aspx?page=61, retrieved from the SFRA’s website on October 6, 2012. Poverty & Race Research Action Council National Housing Law Project

able housing commitments and funding for down payment assistance, workforce development, a first source hiring agreement and a community benefits fund.124 In addition, the development will include rebuilding the Alice Griffith public housing development consistent with the City’s HOPE SF Program and a Choice Neighborhoods Initiative grant.

Hunters Point To achieve this ambitious development plan, the City and the SFRA have pledged all of the net avail- Hunters Point Redevelopment area – specifically, the able tax increment from the Phase 2 area for the site of the Candlestick Park football stadium, called public improvements in the area. The Project will Candlestick Point. The project area is divided into be a transformative project for the Bayview Hunters Parcels A through F, and the transfer of parcels Point community and the City and a true test of occurs in phases after environmental remediation by inclusive gentrification.125 the Navy. This enormous phased mixed-use development will generate hundreds of new construction PRESERVATION OF FEDERALLY- jobs each year, and will create more than 10,000 per- ASSISTED AFFORDABLE HOUSING manent jobs over the next 20 to 25 years. The com- Near the end of the 1990s, the affordable housing pleted development will include: 12,100 housing supply was facing threats from Federal budget and units, 32 percent of which will be affordable hous- policy changes. Beginning in 1996, Federal changes ing; 352.6 acres of open space; 100,000 square feet threatened the potential conversion of 8,000 units in of space for community facilities; job training and 88 HUD-assisted housing developments to market- contracting programs for community residents and rate. Proposals in Washington would have converted organizations; 885,000 square feet of retail; approxi- all project-based Section 8 contracts to tenant-based mately 3 million square feet of “clean” technology vouchers. At the same time, HUD restored an research and development space, a clean tech busi- owner’s right to prepay the underlying FHA-insured ness incubator and the headquarters for the UN mortgage and cancel the project-based Section 8 Global Compact Sustainability Center; new and ren- contract, threatening conversion of these properties ovated space for Shipyard artists; a hotel; and $1 mil- to market-rate units. In response, the City created a lion fund for additional community benefits. The groundbreaking Housing Preservation Program to development is subject to a far-reaching Community preserve its “at risk” affordable housing.126 Benefits Agreement negotiated by the San Francisco Labor Council, the San Francisco Organizing Pro- The SFRA and the Mayor’s Office of Housing ject, and (the former) ACORN that contains afford- worked with residents, owners, nonprofit organiza-

______124 The agreement also included the signatories’ commitment to support the developer-supported ballot measure, Proposition G, on the June 2008 ballot that was deemed necessary for the project to proceed and to oppose a competing initiative, Proposition F, that the developer claimed would doom the project. Proposition G prevailed at the polls and Proposition F failed. The agreement can be found at http://www.benefitingbvhp.org/index.php?option=com_content&view=article&id=83&Itemid=106 125 An enormous amount of material, including all plans, disposition agreements, community benefit agreements, and much more can be found at: http://www.sfredevelopment.org/index.aspx?page=57. Retrieved from website on October 6, 2012. 126 Memo from James B. Morales, General Counsel of the SFRA, to Agency Commissioners (Jan. 31, 2001). Update on the…Housing Preservation Program. San Francisco: A City Committed to Preservation, Policy Link case study, at http://www.policylink.org/ site/c.lk- IXLbMNJrE/b.5136999/k.7DA7/Case_Studies.htm; Galle, Brian, Preserving Federally Assisted Housing at the State and Local Level: A Legislative Toolkit. 29 Hous. Law Bulletin 183 (Oct. 1999). 31 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

tions (including NHLP), state and federal agencies, lose even one.127 Of 35 properties that were pri- and financial institutions to develop the Housing vately owned and at risk of conversion in 1997, by Preservation Program, which was adopted in 1997. 2001, 11 had been transferred into non-profit or At a time when the nation lost over 100,000 units cooperative ownership, ensuring permanent of federally-assisted housing, San Francisco did not affordability.

The SFRA Housing Preservation Program relies on public/private collaboration and an inclusive process that encourages participation from banks, tenant advocates and non-profit housing agencies. The program has three primary components: education and outreach to tenants, regulatory and legislative advocacy, and facilitation of private property ownership to non-profits or cooperatives that will result in long-term affordability.128

The Rent Control Ordinance was amended to apply to any formerly HUD-assisted property occupied before 1979 that emerges from the federal program,129 ensuring that the affordable subsidized rents remain the base rents for the now unrestricted property, and discrimination based on source of income is prohibited, preventing owners from refusing to accept rent vouchers.130

Tax increment funds grants and below-market loans are provided for nonprofit purchasers and pre-development assistance.131 A public land trust model has been used in most cases, whereby the land is purchased by the Redevelopment Agency and leased to the owners of the improvements for use as affordable housing for up to 99 years.132

The success of a program like this depends upon supportive local ordinances, financial assistance for tenant organizing and capacity building, substantial local financing, and the effective use of other fiscal resources for acquisition and renovation purposes.133

______127 San Francisco: A City Committed to Preservation, at http://www.policylink.org/site/c.lkIXLbMNJrE/b.5136999/k.7DA7/Case_Studies.htm. 128 Gray, Deb Goldberg (Sept. 2000). Resident Participation in Affordable Housing Preservation Projects: What Works? (p. 36). Univ. Ctr. For Cooperatives. 129 29 Hous. Law Bulletin at 186, n. 13; San Francisco Administrative Code, Section 37.2(a)(2). 130 Gray, Deb Goldberg (Sept. 2000, p. 36). These are contractual obligations, not affected by the ruling on California’s source of income statute, Sabi v. Sterling, No. B205279 (Cal. Ct. App. Apr.8, 2010), which rejected a Section 8 tenant’s source of income discrimination claim when her landlord refused to accept her Section 8 voucher to help pay her rent after her husband passed away. The court held that the California Fair Employment and Housing Act’s “source of income” discrimination provision does not protect tenants against discrimination based on their participation in the Section 8 Voucher program, finding that Section 8 vouchers do not constitute income for the purposes of the statute. This ruling places California law at odds with that of other states. It is an open question as to whether this ruling preempts local law. 131 29 Hous. Law Bulletin at 188, n.32; San Francisco: A City Committed to Preservation, Policy Link case study. 132 In most cases, the land purchases, averaging approximately $40,000 to $50,000 per unit, were for land originally sold to the developers for $500 per unit. According to Olson Lee, the Director of the Mayor’s Office of Housing and former SFRA Deputy Director for Housing, the public land trust “avoids ever having to do it again, since we had to do it once…This will always be affordable housing and will always serve San Francisco in that way.” Lee interview, July 25, 2012. 32 133 San Francisco: A City Committed to Preservation, Policy Link case study. Poverty & Race Research Action Council National Housing Law Project

THE DOT.COM EFFECT AND and housing unit approvals peaked in 1999 at 3,400 CHALLENGES FOR THE NEXT units. Growth in jobs, however, outpaced housing DECADE development at a ratio of 6.5 new jobs for each new home built during this period, significantly higher Development by the end of the 1990’s shifted from than the generally healthy balance of one new resi- a focus on office and commercial projects to resi- dence for each 1.5 jobs created.136 Therefore, even dential homes. No new office projects were with the increase in housing development, the aver- approved between 1992 and 1996 while the over- age rent for a two-bedroom apartment increased built product slowly gained occupants. Vacancy 115%137 between 1994 and 2000 and the median rates started to decline from near 15% to in 1993 to price of a 3-bedroom home rose 70%.138 just over 5% by 1996. Between 1996 and 1997, San Francisco experienced significant growth in its Not only were new employees in San Francisco core industries, attracting more businesses and searching for housing, but the City was also increas- employees, as it expanded due to the rise of the ingly becoming a “bedroom community” for the dot.com companies. By 2000, the citywide office dot.com employees in the Silicon Valley to the vacancy rate fell to a record low 3%, while office south. Significantly, after the dot.com bust, home rents increased to over $70 per square foot com- sale prices did not follow the path of commercial pared to about $25 per square foot in 1997. Once the “dot.com bust” hit in the early 2000s, however, office vacancies skyrocketed to over 20% by 2003 134 and rents fell 55%. Between 2000 and 2005, In 1992, before the dot.com boom period, there were over 47,000 fewer employed residents in the City had incorporated an inclusionary San Francisco.135 housing policy that applied to certain developments outside of the SFRA’s rede- The increased interest in San Francisco from busi- velopment areas. The policy required 10% nesses and employees during the boom period of units to be set-aside as affordable for meant additional demand for housing. The housing market responded with a significant rise in housing projects seeking conditional use permits or 139 costs – both ownership and rental – along with planned unit developments. Obviously increased production in the late 1990s. Little this policy was not strong enough to miti- market-rate housing development had occurred in gate the demand during this boom period; the early and mid-1990s. In fact, in 1994, affordable however, it laid a foundation for a formal housing units financed by the public sector com- inclusionary zoning (IZ) ordinance in the prised 63% (776 units) of all housing constructed following decade. that year. Housing development picked up in 1997

______134 Downtown Plan Monitoring Report (2004, p. 15-16).33 135 Housing Element (2011, p. 14). 136 Calavita, Nica et al. (Feb. 2004). Inclusionary Zoning: The California Experience (p. 6). NHC Affordable Hous. Policy Review, vol. 3, issue 1. 137 In constant 2000 dollars, an average two-bedroom apartment rented for $1,274 in 1994 and $2,750 in 2000. Downtown Plan Mon- itoring Report (2004, p. 24). 138 In constant 2000 dollars, the median price of a 3-bedroom home was $274,690 in 1994 and $543,059 in 2000. Downtown Plan Monitoring Report (2004, p. 24). 139 Performance Audit (2012, p. 4). 33 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

rents, but rather, continued to increase through at dot.com bust, but by a comparatively low 26%.141 least 2005.140 Rental housing dropped after the Rental vacancies likewise increased, but from just

Chart 4. Median Home Sale Price: San Francisco, 1996 – 2008142

$900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 Median Sale Price $200,000 $100,000 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Chart 5. Average Rent for a Two-Bedroom Apartment: San Francisco, 1991 – 2008143 $3,000

$2,500 Average rent

$2,000

$1,500

Average Rent $1,000

$500

$0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

______140 Housing Element (2011, p. 35). 141 Housing Element (2011, p. 36). 142 Downtown Plan Monitoring Report (2004, p. 38). 34 143 Downtown Plan Monitoring Report (2004, p. 24). Poverty & Race Research Action Council National Housing Law Project

Chart 6. Rental Vacancy Rate: San Francisco, 2000 - 2008144

7.0%

6.0%

5.0%

4.0%

3.0% Vacancy Rate 2.0%

1.0%

0.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008

over 1% in 2000 to a peak of 6% in 2002, indicat- 2000s: Increase Affordable ing a continuing strong rental market. Housing, Remedy Past Losses of Housing, and Face New At decade’s end, evidence of the City’s housing crisis was everywhere. Rents had skyrocketed; the number Challenges of evictions had tripled over the previous five years; The housing crisis described above was a statewide and the number of applicants for new affordable phenomenon. The state’s electorate soon responded housing units exceeded production by a factor of by passing Proposition 46, a $2.1 billion housing ten. Market-rate development consisted mostly of bond, in 2002, and Proposition 1C, a $2.8 billion “live-work” units that were suitable primarily for measure, in 2006, adding greatly to the City’s wealthy singles or couples. In his 1999 State of the resources for affordable housing development.145 City address, Mayor Brown lamented that nothing The City ramped up its partnerships with health threatens our City’s diversity more than the growing and social service agencies to produce new models scarcity of decent affordable housing for low- and of service-enriched housing for frail seniors, people moderate-income people. Calling the housing crisis with disabilities, those with substance abuse or the City’s most critical issue, he stressed the need mental health challenges, homeless people and oth- for regional solutions and a renewed financial com- ers who would otherwise be living in institutions or mitment from the state and federal governments. on the streets. Nonetheless, the private sector was not doing its share, and the exclusionary effects of the tight market demanded that the City produce more affordable housing. Moreover, the declining

______144 Housing Element (2011, p. I.38). 145 See Table 1, supra. 35 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

African American population, coupled with the housing. As noted earlier, revisions to the Jobs- redevelopment plans for the Bayview Hunters Housing Linkage Program were made in 2001, Point, rekindled fears and negative memories of applying housing requirements to all types of com- urban renewal that the SFRA was determined to mercial development, not just office development. address. Significant policies and programs implemented in response, included: With the increase in market-rate housing development, community organizations and other interest r Broadening the City’s Jobs-Housing Linkage groups were also facing a new question – how can program to apply to more than just office we get affordable housing produced from market- development; rate housing development? In 2001, a landmark r Adoption of an inclusionary zoning ordinance court decision in California verified that inclusion- by the City, strengthening its 1992 inclusionary ary housing was a constitutionally valid extension of policy; a jurisdiction’s zoning powers.146 The SFRA had

r Amendments to the SFRA’s Housing been implementing its Housing Participation Policy Participation Policy to adopt inclusionary since 1990, state redevelopment law required inclu- requirements similar to those imposed by sionary housing in redevelopment project areas, and the City; the SFRA’s new project areas had set ambitious inclusionary goals to ensure economic inclusion. In Expansion of the SFRA’s Certificate of r 2002, the City’s inclusionary policy was formally Preference program to increase the ability to adopted as the Inclusionary Affordable Housing re-house displaced residents from the early Ordinance and expanded to include all residential urban renewal period; and developments of ten or more units. The program r Adoption of SB 2113 and SB 211 in 2000 and encouraged on-site development of affordable units 2001, extending the ability to collect tax incre- to increase social and economic integration.147 The ment funding to replace affordable units lost program was refined in 2006 to apply to all residen- during the early urban renewal period. tial developments of five units or more and required a 15% affordable set-aside if the units were built INCREASE PRODUCTION on-site and a 20% set-aside if the units were built At the start of the 2000s, housing was in severe off-site or if in-lieu fees were paid. Affordability shortage and, with the dot.com boom still running standards limited ownership units to be affordable strong, new commercial and residential develop- to households earning no more than 90% of the ment was occurring. As a result, ordinances and area median income (AMI) and rental units for development requirements were expanded to ensure households earning no more than 55% AMI. all types of development were mitigating at least Further, off-site units were required to be built 148 part of their impact on the need for affordable within one-mile of the project site. Revisions were again made in 2010,149 requiring developers to pay

______146 Calavita, Nica et al. (2004, p. 6). The landmark case was Home Builders Ass’n v. City of Napa, 108 Cal. Rptr. 2d 60 (Cal. Ct. App. 2001). 147 Performance Audit (2012, p. v). 148 Non-Profit Housing Assoc. of California (2007). Affordable by Choice: Trends in California Inclusionary Housing Programs (p. 26). 149 The changes in 2010 were largely in response to a ruling by the California Court of Appeals on July 22, 2009, finding that a Los An- geles inclusionary housing law was preempted by the rent control provisions of California’s Costa-Hawkins Rental Housing Act, which allows residential landlords to set the initial rent levels at the start of a tenancy. Palmer v. Los Angeles, 175 Cal. App. 4th 1396 (2009). This ruling has caused most California cities, including San Francisco, to modify such laws, with particular regard to afford- 36 able rental housing requirements. Poverty & Race Research Action Council National Housing Law Project

fees rather than construct inclusionary housing Inclusionary Affordable Housing Program.151 unless they meet special conditions and allowing Between 1992 and 2010, more than 1,500 units developers to defer those fees until receipt of the have been developed through the inclusionary pro- certificate of occupancy for the completed project. gram. Developers constructed the majority of the Prior to the 2010 changes, about 75% of developers units, with inclusionary fees contributing to the constructed inclusionary housing, while only 25% construction of 154 units by the City and the SFRA paid the fees. Since the change in 2010, about 55% developing about 236 units between 2002 and of developers have paid fees.150 2010.152 The units are priced affordable for households earning between 50% and 120% of the San Changes were also made to the Redevelopment Francisco Area Median Income.153 These units rep- Agency’s Housing Participation Policy in 2002. resented about 18% of the 8,081 total units Unit percentages and affordability requirements financed by the Mayor’s Office of Housing or the were amended to be similar to the City’s SFRA between 2002 and 2010.154

Inclusionary units fill a different affordability niche than federally-funded or city-funded affordable housing developments. Inclusionary units primarily serve low- to moderate-income ownership households earning between 55% and 90% of San Francisco’s area median income (SFAMI), whereas projects built with affordable housing fees primarily serve households earning below 50% SFAMI and target households with specific demographics.155 This is significant in San Francisco, where only 26% of new housing built between 2000 and 2008 was affordable to households making 100% or less of SFAMI in 2008; a 3-person household needed to earn over $106,000 per year (over 120% SFAMI) to afford the average rent for a two-bedroom unit; and only 11% of San Francisco households could afford the median housing price, which was over $600,000.156 In other words, the market rate product is also largely unaffordable for households earning between 55% and 120% SFAMI. With the 2010 amendments to the Inclusionary Ordinance encouraging developers to pay fees rather than build units, there is concern that the number of units developed for low- to moderate-income households will decline.157

______150 Performance Audit (2012, pp. v-vi, 50). 151 Housing Element (2001, p. A.5). 152 Performance Audit (2012, p. 46); Housing Element (2011, p. I.95). 153 The affordability of inclusionary units are set according to the City of San Francisco’s Area Median Income (SFAMI) rather than the median income of the San Francisco Metropolitan Statistical Area, the latter being much higher because it includes Marin and San Mateo counties. This ensures that the inclusionary units built are within the financial reach of a greater number of resident households. Housing Element (2011, p. I.42). 154 Performance Audit (2012, p. 46). 155 Performance Audit (2012, p. 47). In fact, almost all of the moderate-income housing produced between 1999 and 2006 came from the inclusionary housing program. Housing Element (2011, p. A.2). 156 Housing Element (2011, p. 21). 157 Performance Audit (2012, p. vi).158 For more information about the Certificate Program, see: http://www.sfredevelopment.org/index.aspx?page=65, retrieved from website on October 7, 2012. 37 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

REMEDY PAST HOUSING LOSSES them with only 7,498 units, resulting in a net loss AND DISPLACEMENT of 6,709 units. In 2000 and 2001, the California Legislature adopted Senate Bill 2113 and SB 211, Certificates of Preference respectively, to redress the loss of residential The Certificate of Preference program, initially an dwelling units affordable to very low, low, and mod- urban renewal requirement, was administered by erate income households during this period. the SFRA to ensure that residents displaced due to Together, these bills allow the SFRA to incur urban renewal activities in the 1960s and 1970s indebtedness exclusively for low and moderate- received first priority for replacement housing. income housing activities until all 6,709 units have Certificates were originally issued to displaced resi- been replaced. Prior to enactment of these bills, the dents and businesses of the early Western Addition ability to collect tax increment revenues from the and Hunters Point projects that had not been satis- Western Addition A-2 Project Area, for example, factorily relocated by the Agency and entitled hold- would have ended in 2009. Instead, tax increment ers to preference for SFRA-funded housing. may to continue to flow as long as all subsequent Certificate holders are now given priority for the tax increment funds generated in the project area Mayor’s Office of Housing-sponsored and citywide (other than amounts needed to repay previous bond housing and business opportunities in redevelop- issues or required by law to be passed through to ment project areas. As long as a Certificate holder other taxing entities) are used solely to finance meets a particular development’s eligibility require- affordable housing and related administrative ments for rental or ownership occupancy, they can costs.159 move to the front of the waitlist to receive first priority for available housing. At the time of the enactment of these bills, the abrupt demise of the redevelopment agencies in The Certificates were originally issued to adult California could not be predicted. As discussed in heads of households that were displaced, but the the next section, these bills ensure that even after program was expanded in the 2000s to include all the demise of the SFRA, the City will continue to members of the household at the time of displace- receive some tax increment to replace the housing ment. Even if the head of household had exercised that was lost during the early urban renewal period. his or her Certificate, other displaced household members, including those who were children at the THE NEW TECH BOOM time of displacement, may also exercise a Towards the end of the decade, San Francisco was Certificate, which are now set to expire in 2014 and experiencing a new tech boom with profound 2016.158 effects on the City’s employment base and housing market. As illustrated by Chart 7, between 2008 Replacement Housing Obligations and 2011, tech employment has increased by Prior to the state-imposed one-for-one replacement almost 50%, while most other job sectors have requirement in redevelopment areas, the SFRA either lost significant jobs or remained relatively demolished 14,207 housing units and replaced static.

______158 For more information about the Certificate Program, see: http://www.sfredevelopment.org/index.aspx?page=65, retrieved from website on October 7, 2012. 159 Senate Bill 2113. Retrieved Sept. 27, 2012, from the City and County of San Francisco as Successor to the Redevelopment Agency 38 website: http://www.sfredevelopment.org/index.aspx?page=187. Poverty & Race Research Action Council National Housing Law Project

Chart 7: Change in Jobs by Industry: San Francisco, 2008- 2011160

______160 From David Talbot, “How Much Tech Can One City Take?” San Francisco Magazine, p. 91, October 2012, available at: http://media.modernluxury.com/digital.php?e=SANF. Printed with permission of San Francisco Magazine. 39 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

Rents are soaring and purchase prices for middle diversity. “We cleaned up this neighborhood and class homes have skyrocketed, with purchase prices stopped the violence in the [public housing] proj- often well over asking prices. “Again and again, you ects – but now we can’t afford to live here any- hear of teachers, nurses, firefighters, police officers, more,” complained Buck Begot, a longtime Bernal artists, hotel and restaurant workers, and others Heights resident and housing activist. “When I with no stake in the new digital gold rush being moved here, every house on my block had a differ- squeezed out of the city.”161 Longtime City residents ent ethnicity…Now they’re all gone.”162 continue to lament the loss of the City’s treasured

______161 David Talbot (Oct. 2012). 162 Quoted in Talbot, 2012. 40 Poverty & Race Research Action Council National Housing Law Project

V. Future Challenges

In 2012, with the state’s commitment to affordable tions, in accordance with state law. According to the housing seemingly a victim of the state’s fiscal crisis City’s Housing Element, as shown in Table 3, San and HUD facing dramatic reductions, San Francisco met about 86% of its allocated housing Francisco shows renewed commitment to meeting goals for the 1999-2006 period, adding 17,473 these daunting challenges. There are limits, how- housing units of the estimated 20,372 units needed. ever, on how much it can accomplish alone. Where ideally only 36% of the new housing in San Francisco would have been priced at market rates, Low- and Moderate-Income and therefore affordable only to the highest income Housing Gap households, over 64% of new units were priced at market. The City did meet about 83% of its share The current San Francisco Housing Element update of very low-income housing (households earning shows that the City has fallen woefully short of below 50% AMI); however, it met only 52% of its meeting its regional housing targets for households share of low-income housing (50 to 80% AMI) and earning between low- and moderate-incomes (i.e., less than 13% of moderate-income housing (80 to 163 between 50% and 120% AMI). The regional 120% AMI). According to ABAG’s 2007-2014 pro- planning association, Association of Bay Area duction goals, San Francisco needs to produce Governments (ABAG), develops estimates of hous- another 31,193 units during this period, or about ing needs in the Bay Area by household AMI and 53% more units than in the prior 1999-2006 plan- distributes affordable housing goals to local jurisdic- ning period.164

Table 3: Housing Production Goals Versus Actual Housing Production San Francisco, 1999-2006165 ABAG Housing Actual New Housing Production Household Income by AMI Production Goals and Acquisition/Rehabilitation # of Units % of Total # of Units % of Total % of Goals Met Very low income (<50% AMI) 5,244 25.7% 4,342 24.8% 82.8% Low income (50 – 79% AMI) 2,126 10.4% 1,113 6.4% 52.4% Moderate income (80 – 120% AMI) 5,639 27.7% 725 4.1% 12.9% Market (>120% AMI) 7,363 36.1% 11,293 64.6% 153.4% TOTAL 20,372 100% 17,473 100% 85.8%

______163 See Appendix 1: Racial and Family Composition of San Francisco Residents and Households: Challenges Ahead, for more information on the impact of this housing gap. 164 Housing Element (2011); Performance Audit (2012, p. i). 165 Housing Element (2011); Performance Audit (2012, p. i). 41 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

One challenge in serving this low- to moderate- increase the flexibility for the development of income group is that federal funding is not available ownership units at 120% AMI.168 for households earning over 80% AMI (and in the largest subsidy, LIHTC, 60% AMI), reducing the City’s ability to leverage local funds with additional The Mayor’s Office of Housing (MOH) monies to produce this housing. Units constructed and the SFRA have been instrumental in through the inclusionary zoning program by private constructing, preserving and rehabilitating developers are the most significant source of housing affordable to these households; however, with units affordable to very-low income house- the changes to the inclusionary program in 2010 holds, as well as units serving special pop- encouraging payment over construction, it is ulation needs, including but not limited to expected the provision of moderate-income units seniors, persons with disabilities and for- will decrease. The Mayor’s Office of Housing is merly homeless persons. Since 2002, evaluating the ability to increase or alter several pro- MOH has financed the construction of grams in response to this need, including but not over 3,800 low-income units and the limited to: SFRA has financed over 3,900 low-

r Doubling the funding to the current Down income units, far surpassing non-city Payment Assistance program from $15 million agency development of about 1,500 low- to about $30 million and providing it to house- income units. This includes the develop- holds earning up to 150% AMI;166 ment by the SFRA of the first LEED Silver certified affordable housing project in San r Increasing the rehabilitation housing upgrades 169 program;167 and Francisco, providing 106 SRO apartments for formerly homeless individuals in Exploring options under the inclusionary pro- r the South of Market area, called Plaza gram to encourage construction of rentals Apartments.170 affordable to households up to 80% AMI and

______166 MOH administers six down payment assistance programs, including four programs for purchasers of market rate units and two programs for purchasers of below market rate units. These programs provide first time low and moderate homebuyers with down payment loans of between $10,000 and $100,000. Performance Audit (2012, p. 10). 167 MOH provides both grants and loans to homeowners and to owners of multi-family properties in need of repair, lead remediation, utility upgrades and other needs. Retrieved Sept. 27, 2012, from Mayor’s Office of Housing website: http://www.sf-moh.org /index.aspx?page=318. 168 Lee interview, July 25, 2012. 169 In 2005, San Francisco’s Mayor Gavin Newsom announced that the City would apply environmentally sustainable development prin- ciples to all the City’s new affordable housing developments. With this announcement, San Francisco became the first city in the country to adopt green construction standards for housing targeted to low-income residents. Retrieved Sept. 27, 2012, at: http://www.californiagreensolutions.com/cgi-bin/gt/tpl.h,content=2583. 170 The development was completed in 2005 and fully occupied in 2006. Retrieved Sept. 27, 2012, at: http://www.calredevelop.org/Ex- ternal/WCPages/WCWebContent/WebContentPage.aspx?ContentID=1193. It was developed by the Public Initiatives Development Corporation, a wholly owned subsidiary of the San Francisco Redevelopment Agency, with additional financial assistance by Green Communities, a national green affordable housing program. Mayor’s Office of Housing 2008 Annual Housing Report (2008, p. 27). Retrieved Sept. 27, 2012, from website: http://sf-moh.org/Modules/ShowDocument.aspx?documentid=4499. 42 Poverty & Race Research Action Council National Housing Law Project

Demise of the SFRA and Birth of the Housing Trust Moving forward, a central focus of MOH in conjunction with the San Francisco Housing Authority171 is the HOPE Fund? SF program. This is a collaborative, visionary effort of the In partnership with San Francisco’s non- City of San Francisco and its mayor, city agencies, and profit developers, the SFRA and its tax housing experts, as well as leading developers, commu- increment revenue became powerful tools nity-based organizations, and residents to revitalize eight for the development of affordable hous- of San Francisco’s public housing developments. HOPE ing. As noted above, since 1990, over SF is the nation’s first large-scale public housing revital- $600 million of tax increment financing ization project to prioritize current residents and require has contributed to the development of one-for-one replacement, while also investing in high- more than 10,000 units of affordable quality, sustainable housing and broad scale community housing for low- and moderate-income development. In sites across San Francisco, HOPE SF will families and individuals throughout San create thriving, mixed-income communities, providing Francisco.173 Tax increment revenues have green buildings, better schools, new local businesses and comprised almost one fourth of the total onsite resident services that will transform these commu- funding for affordable housing in San nities and provide opportunities to the residents who Francisco since 2002 and constitute 63% have struggled for generations.172 of City and local funding alone.

Chart 8: City, State and Federal Financing of San Francisco’s Affordable Housing Projects: FY 2002-03 to FY 2010-11174

City and Federal Sources Other 14% Local Sources Tax 43% of Total 38% Increment Revenues 24% of Total

State Sources 18%

______171 The San Francisco Housing Authority (SFHA) was established in 1938. The SFHA is the oldest housing authority in California and the 17th largest in the country. The Authority administers the rental of public housing and the Section 8 voucher program in San Francisco. The SFHA has served over 10,000 individuals and families through the Housing Choice Voucher Program and serves over 20,000 individuals residing in San Francisco in total. SFHA owns 6,262 units of public housing, making it one of the largest property owners in the City. For more information, visit the SFHA website at http://sfha.org/index.html. 172 About HOPE SF: http://hope-sf.org/about.php. 173 Every dollar the Agency has invested has resulted in over $4.70 in additional investment from other sources, including federal tax credit equity, banks, foundations, and other public programs. Housing Programs. Retrieved Sept 27, 2012 from City and County of San Francisco as Successor to the Redevelopment Agency website: http://www.sfredevelopment.org/index.aspx?page=75. See below discussion for more information. 43 174 Performance Audit (2012, p. ii). From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

When Governor Jerry Brown announced his pro- Redevelopment Agency, along with all 400 redevel- posal to shut down the state’s 65-year old opment agencies in California, was dissolved as of Redevelopment Agencies (RDAs) in 2011, he hit a February 1, 2012. raw nerve with the City and local housing advocates. The Governor’s plan was to transfer over $5 Upon dissolution, the City became the successor to billion in annual redevelopment funds to local “suc- the SFRA and authorized the Mayor’s Office of cessor” agencies. The successor agencies would use Housing to manage the former SFRA’s affordable these funds to retire redevelopment debts and con- housing assets, exercise the housing functions that tractual obligations and redirect remaining revenues the SFRA previously performed, and continue to to other local governments in the county, such as K- implement “enforceable obligations” which were in 14 education and fire service districts. The funds place prior to the dissolution.176 Three major rede- were to be redirected to help close the $25 billion velopment project areas constitute enforceable obli- budget deficit that California faced in 2012. gations that will continue under the Successor Agency for non-housing functions and MOH for In a June 2011, a special legislative session convened housing: the Mission Bay,177 Hunters Point to address California’s fiscal shortfall, approving the Shipyard,178 and Transbay179 redevelopment proj- dissolution of all redevelopment agencies, but also ects. Further, as discussed above, under SB 2113, allowing cities to keep their agencies in place by the City will continue to receive tax increment committing to substantial “community remittances” funding from otherwise expired project areas to to be paid to the state. assist in the development of 6,709 replacement housing units that were lost to early urban renewal A coalition in favor of redevelopment filed suit the efforts. Almost 900 replacement housing units have following month to fight the dissolution; however, been provided, leaving approximately 5,800 hous- the Supreme Court determined that the legislature ing units to be replaced.180 could abolish redevelopment agencies but could not require those agencies to make payments to the Perhaps the most devastating threat posed by rede- state.175 Accordingly, the San Francisco velopment’s demise is the significant loss of funding

______175 California Redevelopment Association et al. v. Ana Matosantos, 267 P. 3d 580 (Ca. 2011). 176 Board Resolution No. 11-12 (Jan. 2012). 177 In conjunction with the approval of the redevelopment plans in 1998, the SFRA and Catellus Development Corporation entered into Owner Participation Agreements (OPAs). The OPAs are considered binding enforceable obligations that the City assumed as successor to the redevelopment agency. Retrieved Sept. 25, 2012, from San Francisco Office of the City Administrator website: http://sfgsa.org/modules/showdocument.aspx?documentid=8560 178 Having adopted the redevelopment plan in 1997, the Agency entered into disposition and development agreements with HPS Devel- opment Co. and CP Development Co. for phases 1 and 2, respectively. Retrieved Sept. 25, 2012, from San Francisco Office of the City Administrator website: http://sfgsa.org/modules/showdocument.aspx?documentid=8558 179 Adopted in 2005 and 2006, the Transbay redevelopment plan is enforceable due to an agreement with the Transbay Joint Powers Authority and USDOT, in order to secure a TIFIA loan. Retrieved Sept. 25, 2012, from San Francisco Office of the City Administrator website: http://sfgsa.org/modules/showdocument.aspx?documentid=8559 180 The fate of other important redevelopment projects such as Bayview Hunters Point, South of Market, and Treasure Island is less clear. In the case of Treasure Island, the City has opted to convert the redevelopment area into an Infrastructure Financing District. The district will generate tax increment financing to pay for some of the infrastructure costs. Retrieved Sept. 27, 2012, from SPUR website: http://www.spur.org/blog/2012-02-23/bay-area-cities-adjust-life-after-redevelopment.

44 Poverty & Race Research Action Council National Housing Law Project

for affordable housing development.181 The City of the area median income to better serve their has, however, already proposed a charter amend- needs.185 In comparison, presently 76% of the City’s ment to institute a Housing Trust Fund – and the designated affordable rental units target households Amendment was just approved by the voters in earning below 50% of the area median.186 November 2012. The new Housing Trust Fund is expected to more than compensate for the loss of The Housing Trust Fund will also fund programs in the tax increment revenue dedicated to affordable addition to housing production to address resident housing development. housing needs. This includes $15 million allocated to the Down Payment Assistance program to help The Housing Trust Fund, which resulted from households earning between 80 and 120% AMI negotiations between members of the real estate purchase homes.187 The Housing Stabilization industry, housing activists and small property own- Program will also receive $15 million to help cur- ers, will provide an estimated $1.5 billion over the rent occupants maintain their housing, provide next 30 years for affordable housing production and foreclosure relief and “make their homes safer, more other housing programs.182 Revenue will be cap- accessible, more energy efficient, and more sustain- tured from former tax increment, hotel taxes, and able.”188 Finally, up to 10% of the Fund’s appropria- an increase in business license fees.183 tions may be allocated each year to the Complete Neighborhoods Infrastructure Grant program “to The Fund also responds to a growing political will accelerate the build-out of the public realm infra- and City need to provide housing for moderate structure needed to support increased residential income households.184 The Fund will provide density in the City’s neighborhoods.”189 financing for households earning at or below 120%

______181 “At risk, however,” in the words of Mayor Edwin Lee, “is continued future progress in developing affordable housing, revitalizing blighted neighborhoods and generating the resources to fund urban infill development and infrastructure.” Retrieved Sept. 24, 2012, from City and County of San Francisco as Successor to Redevelopment Agency website: http://www.sfredevelopment.org/Modules/ShowDocument.aspx?documentID=3580 182 According to Olson Lee, the Housing Trust Fund “more than doubles what redevelopment gave to affordable housing developers overthe past 20 years.” Lee Interview, July 25, 2012. 183 Mayor Lee’s Statement on Housing Trust Fund Approval for November Ballot (July 24, 2012). Retrieved Sept. 27, 2012, from City and County of San Francisco Office of the Mayor website: http://www.sfmayor.org/index.aspx?recordid=54&page=846. To achieve consensus, the housing trust fund also reduces inclusionary housing obligations for market rate developers by 20%. According to the Mayor’s Office of Housing, growing the subsidy pie and expanding market-rate production are mutually supportive strategies. In- creased market-rate production may relieve upward price pressures on the existing housing stock by providing more supply to address high housing demand. Reducing the affordability gap for some upper middle income residents would allow the City to focus subsidies on lower-income households. Housing for San Francisco Residents (2012). Presentation by Mayor’s Office of Housing, et al. 184 See also the discussion immediately above on the “Low- and Moderate-Income Housing Gap” for more information. 185 Housing Trust Fund Charter Amendment, at http://sfgov2.org/ftp/uploadedfiles/elections/candidates/Nov2012/Nov2012_SanFran- ciscoHousingTrust-CharterAmend.pdf. 186 Housing for San Francisco Residents (2012). Presentation by Mayor’s Office of Housing, et al. 187 Housing for San Francisco Residents (2012). Presentation by Mayor’s Office of Housing, et al. 188 Housing Trust Fund, Sec. 16.110(d)(3) 189 Housing Trust Fund, Sec. 16.110(e).

45 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

California’s decision to eliminate redevelopment cates. Particular points of leverage and funding comes as the latest blow to San Francisco’s capacity sources come and go in California’s tumultuous to fund affordable housing. The City’s ability to political climate, but a dedicated movement pro- quickly develop an alternative funding stream after moting housing justice has become a political force the demise of redevelopment demonstrates the in its own right, providing optimism that this latest organizational tenacity of affordable housing advo- obstacle will also be overcome.

46 Poverty & Race Research Action Council National Housing Law Project

VI. Conclusion

It is evident that San Francisco will continue to ability goals set by ABAG described above. San need to be inventive and its housing advocates Francisco continues to evolve its policy to fill in the strong to meet the challenges ahead. Some advo- gaps in its housing needs and find creative and sub- cates are already looking beyond the Trust Fund to stantial sources of funding to develop and maintain the new frontier of housing policy. Building on affordable housing. By also ensuring that the needs development limitation and job-housing balance of local residents are heard, San Francisco is demon- ideas from Proposition M and the phasing and link- strating that the early urban renewal and displace- age of different types of development demanded by ment days are gone and have been replaced with a the more equitable and inclusive recent redevelop- vision of creating the housing, jobs and services ment projects, they are formulating a plan to link required to maintain and rebuild vibrant, diverse approval of market-rate housing to meet the afford- and thriving communities within the City.

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47 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

Afterword: Considerations for Other Communities

The interaction of dedicated community advocacy units or other non permanent housing uses. The and strong coalitions, availability of substantial primary problem has been lack of enforcement. funding sources, and housing programs that are Because such conversions most often occur without responsive to community needs and market changes any formal regulatory process, they are hard to iden- have resulted in the successful evolution of afford- tify and regulate. The ordinance itself relies on a able housing programs in San Francisco. While complaint from a displaced permanent tenant of an these factors generated the City’s most influential unlawful conversion to initiate an investigation by programs, their presence does not guarantee a suc- the Department of Building Inspection. cessful result. For example, in 1981, San Francisco Investigation often entails visiting the property at adopted an Apartment Unit Conversion and night and other measures to prove conversion, Demolition Ordinance that prohibits the conver- requiring extra resources and staff that has not been sion of apartments to tourist or transient use.190 The provided. In the face of the revived dot.com boom conversion from apartment to tourist or transient this decade, however, the conversion of long term use, particularly of rent-controlled apartments, rentals to short term tourist and transient uses has especially impacts low- to moderate-income house- again hit the forefront of tenant concerns in San holds, displaces existing tenants, and decreases the Francisco,192 prompting yet another look at the already limited number of units available to serve ordinance.193 these families. This ordinance resulted from the same development pressures and organized tenant Also, before implementing some of San Francisco’s movement that culminated in the Rent successes in other communities, it is important to Stabilization, Condominium Conversion, and recognize that housing programs are shaped by state Residential Hotel Demolition and Conversion ordi- and local laws, as well as market forces unique to nances adopted in 1979 and 1980.191 Unlike these each situation. For example, some states may pro- ordinances, however, the apartment conversion hibit rent control of privately-owned rental units. ordinance has not been successful in meeting its This means that, even if the necessary community, purpose, which is to stop apartments from becom- political and economic factors are in place, adopting ing corporate suites, timeshares, surrogate hotel a Rent Control and Stabilization Ordinance just

______190 San Francisco Administrative Code, Ch. 41A: Apartment Unit Conversion and Demolition, at http://www.amlegal.com/nxt/ gateway.dll/California/planning/planningcode?f=templates$fn=default.htm$3.0$vid=amlegal:sanfrancisco_ca$sy. 191 See IV. Evolution of Housing Policy, 1970s: Neighborhood Preservation and Tenant Protection, supra, for more information. 192 Glantz, Aaron (July 21, 2011). Conversion of Apartments to Rentals for Tourists Is Surging. The Bay Citizen, at http://www.nytimes.com/2011/07/22/us/22bchomes.html?pagewanted=all&_r=0. 193 Legislation was introduced in April and under consideration in October 2012 by the Land Use Committee to improve enforcement capabilities of the ordinance. A key component gives nonprofit groups the same standing to enforce apartment conversions that they held since 1990 for SRO’s. See Shaw, Randy (Oct. 1, 2012). Moment of Truth for Illegal Apartment Conversions, at http://www.beyondchron.org/articles/Moment_of_Truth_for_Illegal_Apartment_Conversions_10555.html. 48 Poverty & Race Research Action Council National Housing Law Project

like the one in San Francisco may not be a legal would be difficult to achieve through other avenues option. Further, San Francisco has typically been in (E.g., public-private partnerships, etc.). This is illus- a fortunate position of too much capital competing trated, for example, by the Mission Bay redevelop- for too few development opportunities. San ment area. The 1991 Mission Bay development Francisco’s market has, therefore, been able to sup- plan was abandoned in 1996 by the private devel- port exactions and development restrictions that oper due to downturned market conditions. The may not be economically feasible in other commu- project was revived, however, under a redevelop- nities. Borrowing ideas from other states and com- ment plan through the SFRA in 1998, which could munities can promote creativity in meeting local use tax increment financing to pay for the substan- needs; however, each community must assess its tial infrastructure and affordable housing.194 With own legal, political and market constraints to tailor the dissolution of redevelopment agencies in its programs accordingly to achieve its housing California, the comprehensiveness of past redevel- goals. opment plans, incorporating substantial affordable housing (often over 30% of units), community Finally, the unique structure of redevelopment services and resources, infrastructure improvements, agencies in California, the regulatory structure of commercial development, parks and rehabilitation, the SFRA in particular, and the substantial alloca- will take some ingenuity to recreate in the future – tion of tax increment to fund affordable housing a task that the government, local advocates, and has resulted in planned redevelopment areas that others are already undertaking.195

______194 See IV. Evolution of Housing Policy, 1990s: Inclusive Redevelopment, the Dot.Com Boom, and Housing Preservation, supra, for more information. 195 See, e.g., V. Future Challenges, supra, and the discussion regarding the proposed Housing Trust Fund. 49 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

Resources

Arroyo, Noah (July 2012). Housing Trust Fund Goes to Home Builders Ass’n v. City of Napa, 108 Cal. Rptr. 2d Voters. Retrieved Sept. 27, 2012 from MissionLocal web- 60 (Cal. Ct. App. 2001). site: http://missionlocal.org/2012/07/housing-trust- Housing for San Francisco Residents (2012). Presentation fund-left-in-the-hands-of-voters/. by Mayor’s Office of Housing, et al. Beatty, David F., et al. (2004). Redevelopment in Housing Trust Fund Charter Amendment, at California, 3d Ed. Salt Lake City, Ut.: Publishers Book http://sfgov2.org/ftp/uploadedfiles/elections/candi- Services. dates/Nov2012/Nov2012_SanFranciscoHousingTrust- Condo Conversion BMR Program. Retrieved Sept. 27, CharterAmend.pdf 2012, from Mayor’s Office of Housing website: Fulbright, Leslie (July 21, 2008). Sad Chapter in Western http://sf-moh.org/index.aspx?page=257. Addition History Ending. San Francisco Chronicle. Cote, John (October 1, 2012) Lee Aims to Expand S.F. Retrieved Sept. 27, 2012 from SFGate website: Housing. Retrieved October 1, 2012 from SFGate.com: http://www.sfgate.com/bayarea/article/Sad-chapter-in- http://www.sfgate.com/politics/article/Lee-looks-to- Western-Addition-history-ending-3203302.php#ixzz expand-housing-with-Prop-C-3907574.php. 27W2D75WW. Calavita, Nica et al. (Feb. 2004). Inclusionary Zoning: Gallagher, Mary. Tenants in Common Disadvantages. San The California Experience (p. 6). NHC Affordable Hous. Francisco Chronicle. Retrieved Sept. 27, 2012, from Policy Review, vol. 3, issue 1. SFGate website: http://homeguides.sfgate.com/tenants- common-disadvantages-6821.html; California Redevelopment Association et al. v. Ana Matosantos, 267 P. 3d 580 (Ca. 2011). Galle, Brian (Oct. 1999). Preserving Federally Assisted Housing at the State and Local Level: A Legislative Toolkit. City and County of San Francisco as Successor to the 29 Hous. Law Bulletin 183. Redevelopment Agency website: http://www.sfredevelopment.org/. Gellen, Martin, et al. (July 2004). Promoting Homeownership Through Condominium Conversion. Comerio, Mary C. (1997). Housing Repair and SPUR. Retrieved Sept. 27, 2012, from SPUR website: Reconstruction After Loma Prieta. Univ. of Ca., Berkeley, http://www.spur.org/publications/library/report/ at http://nisee.berkeley.edu/loma_prieta/comerio.html. promotinghomeownershipthroughcondominium Council of Community Housing Organizations website: conversion_090704. http://www.sfccho.org. Gray, Deb Goldberg (Sept. 2000). Resident Participation DeLeon , Richard E. (1992). Left Coast City: Progressive in Affordable Housing Preservation Projects: What Works? Politics in San Francisco, 1975-1991. Univ. Press of Univ. Ctr. for Cooperatives. Kansas. Habal, Estella (2007). San Francisco’s International General Plan of the City and County of San Francisco: Hotel: Mobilizing the Filipino American Community in Downtown______Area Plan. Department of City Planning, the Anti-Eviction Movement. Philadelphia, Pa: Temple retrieved`1 dakfas;f from http://www.sf-planning.org/ftp/ University Press. General_Plan/Downtown.htm on Oct. 5, 2012. Hartman, Chester (1971). Relocation: Illusory Promises General Plan of the City and County of San Francisco: and No Relief, 57 Univ. of Va. Law Review 756. Chinatown Area Plan, retrieved from: http://www.sf- planning.org/ftp/General_Plan/Chinatown.htm. 50 Poverty & Race Research Action Council National Housing Law Project

Hartman, Chester (1984). The Transformation of San Housing Programs, at http://www.nonprofithousing.org/ Francisco. Totawa, NJ: Rowman & Allanheld.(revised pages/publications-and-press-room/publications.html. and expanded version published in 2002, under the title Palmer v. Los Angeles, 175 Cal. App. 4th 1396 (2009). City for Sale: The Transformation of San Francisco. Berkeley, CA: University of California Press) Rubin, Gayle (1997). The Miracle Mile, South of Market and Gay Male Leather 1962-1997. In Reclaiming Hendrix, Anastasia (Apr. 17, 2001). Up and Out / More San Francisco: History, Politics, Culture. San Francisco, blacks leaving inner cities for suburbs. San Francisco Ca: City Lights Books (1998). Retrieved Sept. 27, 2012 Chronicle. Retrieved Sept. 27, 2012 from SFGate web- from FoundSF website: http://foundsf.org/index.php site: http://www.sfgate.com/bayarea/article/Up-and-Out- ?title=Redevelopment. More-blacks-leaving-inner-cities-for-2930810.php. Rubin, Jasper (Nov. 1999). The Decline of the Port. Housing Element: Part I: Data and Needs Analysis (Mar. SPUR. Retrieved Sept. 27, 2012 from the SPUR web- 2011). Adopted by San Francisco Planning Commission. site: http://www.spur.org/publications/library/article/ Housing Element: Part II: Objectives, Policies and declineofport11011999. Implementation Programs (2004). Adopted by San San Francisco Budget and Legislative Analyst (Jan. Francisco Planning Commission. 2012). Performance Audit of San Francisco’s Affordable Interview with Calvin Welch, San Francisco housing Housing Policies and Programs. Prepared for Board of activist, lecturer in development politics, and former Supervisors for the City and County of San Francisco. longtime Co-Director of the Council of Community San Francisco Planning Department (June 2011). 25- Housing Organizations, July 20, 2012. Years: Downtown Plan Monitoring Report: 1985-2009. Interview with Olson Lee, Director of the Mayor’s Office San Francisco Planning Department (2004). Downtown of Housing, former Chief Financial Officer at the Plan Monitoring Report. Mayor’s Office of Housing and former Deputy Director for Housing of the SFRA, July 25, 2012. Schuk, Carolyn (2011). Redevelopment Agencies 101. Retrieved Sept. 27, 2012, from Santa Clara Weekly web- Jacobson, Daniel and Stallworth, Chris (2009). Bayview- site: http://www.santaclaraweekly.com/2011/Issue-7/ Hunters Point: Urban Transformations and Community redevelopment.html. Cooptation, Urbanist, 161. Senate Bill 2113. Retrieved Sept. 27, 2012, from the Kelly, Dan (Nov. 2009). Fiscal and Policy Implications for City and County of San Francisco as Successor to the Single Room Occupancy Hotels. Report to SF-HAS Redevelopment Agency website: http://www.sfredevelop Managers/City Department Representatives, at www.sf- ment.org/index.aspx?page=187. planning.org. Shaw, Randy (1996). The Activist’s Handbook. Berkeley, Leavenworth Properties v. San Francisco, 189 Ca: Univ. of California Press. Cal.App.3d 986, 992 (1987). SROs in San Francisco. Retrieved Sept. 27, 2012, from Mayor’s Office of Housing 2008 Annual Housing Report Central City SRO Collaborative website: (2008). Retrieved Sept. 27, 2012, from website: http://www.ccsro.org/pages/history.htm. http://sf-moh.org/Modules/ShowDocument.aspx?documentid=4499. Starkie, Edward (1991). Office Development Linkage in San Francisco: Exacting the Social Costs of Growth. Mayor’s Office of Housing State of the Housing Market Submitted to Center for Real Estate Development, Mass. Study: Briefing Book (Apr. 2012). Prepared by Seifel Inst. of Technology. Consulting, Inc., for the San Francisco Mayor’s Office of Housing, at http://sf-moh.org/modules/showdocument. Supervisors offer new plan to allow more condo conversions. aspx?documentid=5818.______Retrieved Sept. 27, 2012, from SFGate website: http:// `1 dakfas;f blog.sfgate.com/cityinsider/2012/06/11/supervisors- National Housing Law Project (2004). HUD Housing offer-new-plan-to-allow-more-condo-conversions/. Programs: Tenants’ Rights, 3rd ed. Talbot, David (Oct. 2012). How Much Tech Can One Non-Profit Housing Assoc. of California (2007). City Take? San Francisco Magazine, available at: Affordable by Choice: Trends in California Inclusionary http://media.modernluxury.com/digital.php?e=SANF. 51 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

Update on the Housing Preservation Program. San Western Addition Community Org. v. Weaver, 294 F. Francisco: A City Committed to Preservation, Policy Link Supp. 433, 435 (N.D. Ca. 1968). case study, at http://www.policylink.org/site/c. World Port Source. Port of Oakland Review. Retrieved lkIXLbMNJrE/b.5136999/k.7DA7/Case_Studies.htm. Sept. 27, 2012 from the World Port Source website: Voter Information Pamphlet (Nov. 5, 1996). http://www.worldportsource.com/ports/review/USA_CA Consolidated Presidential Election. Retrieved Sept. 27, _Port_of_Oakland_231.php. 2012 from: http://sfpl.org/pdf/main/gic/elections/ Wright, James and Rubin, Beth (1997). Is Homelessness a November5_1996short.pdf. Housing Problem? In Understanding Homelessness: New Welch, Calvin (2011). The Fight to Stay: The Creation Policy and Research Perspectives. Washington, D.C.: of the Community Housing Movement in San Fannie Mae Foundation, at http://content.knowledge Francisco, 1968-1978. In Chris Carlsson and Lisa Ruth plex.org/kp2/kp/report/report/relfiles/homeless_1997_w Elliott (Eds.), Ten Years that Shook the City: San Francisco right.pdf. 1968-1978. San Francisco: City Lights Books. Yerba Buena Center. Retrieved Sept. 27, 2012, from City Western Addition A-1. Retrieved Sept. 27, 2012, from and County of San Francisco as Successor to City and County of San Francisco as Successor to Redevelopment Agency website: http://www.sfredevel- Redevelopment Agency website: http://www.sfredevelop- opment.org/index.aspx?page=190. ment.org/index.aspx?page=64.

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52 Poverty & Race Research Action Council National Housing Law Project

Appendix 1. Racial and Family Composition of San Francisco Residents and Households: Challenges Ahead

The population of San Francisco has been increas- Evaluating the actual numerical change in the pop- ing since the 1980s an average of just under 0.6% ulation shows that, after decreasing between 1970 per year. This increase has neither been consistent and 1990, the white population has been showing across all nationalities nor all household types, modest growth. Residents who are Chinese, “other however. non-white” (one-third of which includes other Asian populations), or of Hispanic origin have San Francisco is often depicted as diverse, in large shown the greatest increases, at a respective 66%, part because less than half of its population is of 93% and 43% since 1970. In significant decline, white origin and one-third is of Asian descent. however, is the Black or African American popula- Another 15% are of Hispanic origin, a population tion, dropping almost in half (97%) since its peak that has been increasing its presence in the City since of about 96,000 persons in 1970. the 1970s. Just over 6% are Black or African Ameri- can, showing significant decline since the 1970s.

Ethnic Composition of the Population: 1970 to 2010 % change 1970 1980 1990 2000* 2010* (1970-2010)

White 71.4% 59.2% 53.6% 49.7% 48.5% -30.9% Black or African American 13.4% 12.7% 10.9% 7.8% 6.1% -96.6% Japanese 1.6% 1.8% 1.6% 1.5% 1.3% -15.7% American Indian 0.4% 0.5% 0.5% 0.4% 0.5% 27.9% Filipino 3.5% 5.7% 5.7% 5.2% 4.5% 32.1% Chinese 8.2% 12.1% 18.1% 19.6% 21.4% 65.9% Other non-white 1.5% 7.9% 9.7% 15.8% 17.8% 92.7% Total 71,674 678,974 723,959 776,733 805,235 11.1% Hispanic Origin 9.7% 12.4% 13.3% 14.1% 15.1% 42.8% Source: Decennial Census (1970-2010). *NOTE: Race data between the 1990 and 2000 Census and later are not directly comparable. The 2000 Census asked respondents to report if they were of one race or a combination of races, which was not asked in 1990 or earlier. The above data for 2000 and 2010 reflects respondents who reported they were of one race only. Respondents that indicated they were white in combination with one or more races increased the representation of white persons to 50.6% in 1990 and 49.7 in 2010; those that reported they were Black or African American in combination with one or more races increased their representation to 8.3% in 1990 and 6.8% in 2010. The comparable percentage of these populations to 1990 likely falls within the range represented by these values.

53 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

Numeric Change in Population by Race:1970 - 2010

Source: Decennial Census (1970-2010).

The income of these respective populations shows that the median income of these households actu- the significant struggle of the Black or African ally decreased to just under $24,000. American population to regain their foothold in San Francisco. Where the median income of all Further, the income profile of African American households in the City increased in actual dollars by households is almost the inverse of White house- 30% between 1999 and 2010, the income of Black holds, with 61% of African American households or African American householders increased a sig- earning under $40,000 per year and 65% of White nificantly low 3.4%. In 1999 dollars, this means households earning over $50,000 per year.

Median Income of San Francisco Households: 1999 and 2010 1999 2010 % change

All Households $55,221 $71,779 30.0% White householder (not Hispanic/Latino) $65,431 $90,582 38.4% Asian householder $49,596 $61,644 24.3% Hispanic householder $46,553 $56,289 20.9% Black or African American householder $29,640 $30,661 3.4% Source: 2000 Census; ACS 3-year estimates (2008-2010)

54 Poverty & Race Research Action Council National Housing Law Project

Income Distribution of Households by Race: 2010

Source: ACS 3-year estimates (2008-2010)

The change in households by type shows that the households increased (despite a decrease in popula- loss of moderate-income households and families is tion); however, family households declined by about not unique to the Black or African American popu- 14% and households with their own children lation during this time. The largest decline in family declined by almost 18%. The number of house- households occurred between 1970 and 1980. holds with children continued to decrease each During this same period, the actual number of decade through 2000, showing a very modest (less

Change in Population and Households by Type: San Francisco, 1970 to 2010 Number of Persons or Households % Change 1970- 1980- 1990- 2000- 1970 1980 1990 2000 2010 80 90 00 10

Population 715,674 678,974 723,959 776,733 805,235 -5.1% 6.6% 7.3% 3.7% Households 295,174 299,867 305,984 329,700 345,811 1.6% 2.0% 7.8% 4.9% Family Households 164,436 141,590 143,818 145,186 151,029 -13.9% 1.6% 1.0% 4.0% With children 69,670 57,288 56,831 54,707 55,212 -17.8% -0.8% -3.7% 0.9% Source: US Census

55 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

than 1%) increase over the past ten years. This is typical for areas in which housing available for Income Distribution of Households moderate-income households and families is scarce, by AMI: San Francisco, particularly ownership opportunities.196 1990 and 2010199

An analysis of the change in households by area 30.1 < 50% median income (AMI) between 1990 and 2010 also 26.8 supports the conclusion that low- and moderate- 15.9 income households (those earning between about 50-80% 18.1 197 50% and 120% AMI), have been leaving the city. 2010 17.1 The percentage of households earning within this 80-120% 1990 20.5 range declined from 39% in 1990 to about 32% in 9.8 2010, with the numerical loss resulting in about 120-150% 10.2 5,700 fewer middle-income households in San 27.7 Francisco in 2010. In contrast, households earning 150% + 24.4 below 50% AMI and those earning over 150% 0% 5% 10% 15% 20% 25% 30% 35% AMI each increased by about 22,000 households Percent of Households since 1990.

Housing costs have also increased as a percentage of total income for low, moderate and above moderate The Mayor’s Office of Housing commissioned a (120-150% AMI) households since 1990. On the study, completed in 2009, to understand the rea- other hand, low-income and upper-income housing sons behind the decline in Black or African costs as a percent of income show little change. American households and, more importantly, changes that need to occur to provide opportunity All of the above factors are symptoms of the find- for low-income African Americans, re-establish an ings of the 2009 Housing Element, showing that African-American middle class in the City and San Francisco fell significantly short of meeting its rebuild this community as a strong presence in San housing needs for low- and moderate-income Francisco. Findings indicated that, between 1990 198 households. Despite this, family households and and 2005, very low income households as a per- households with children showed modest growth centage of all African American households since the year 2000, although less than the increase increased from 55% to 68%, respectively, and in households overall. The same cannot be said for middle-income household dropped by 33%, with Black or African American households.

______196 See also San Francisco Mayor’s Office of Housing State of the Housing Market Study: Briefing Book, p. 25 (Apr. 2012) for more information. 197 In 2011, a 2-person household at 50% AMI earned $40,650 per year; a 2-person household at 120% AMI earned $97,550 per year. San Francisco Mayor’s Office of Housing 2011 Income Limits. 198 See Table 3 in main report. 199 San Francisco Mayor’s Office of Housing State of the Housing Market Study: Briefing Book, at 17 (Apr. 2012). Data source is San Francisco Mayor’s Office of Housing, 1990 and 2000 Census/IPUMS, 2005-09 five year estimates/IPUMS, 2010 Census, Seifel Consulting Inc. 56 Poverty & Race Research Action Council National Housing Law Project

the neighborhood. About this time, San Francisco Average Housing Costs also lost many of its industrial jobs, including the as % of Household Income: Port of San Francisco and the Hunters Point Naval San Francisco, 1990 and 2010200 Shipyard, severely decreasing employment opportunities for African American workers.202 Many work- 60% ers followed jobs to the East Bay. As of 2000, the largest concentrations of the Black or African 50% American population live in the Western Addition (33% African American), Bayview Hunters Point 40% (45%) and, to the south, Visitacion Valley and 2010 Oceanview Merced Ingleside (about 19% each).203 30% 1990 As noted above, as African American households move into the middle and upper income levels, they 20% have been out-migrating to areas outside of the

10% City. San Francisco is not alone in this movement, with Alameda, Marin, San Mateo and Santa Clara 0% also losing higher income African American house- < 50% 50- 80- 120- 150% + AMI 80% 120% 150% holds to counties like Contra Costa and Solano. Household Income The more affordable housing costs, home purchase and job opportunities, lower crime and suburban lifestyle have been cited as pluses for those that have upper-income households declining 63%. This moved. While out-migration for those that choose trend continued through at least 2010.201 to do so can be positive for those households, there is still a question as to how much of this shift is The out-migration of Black or African American from household choice, or a result of the lack of households has been about 40 years in the making, housing, employment and community options for beginning with the urban renewal projects in the these households to remain in the city.204 late 60’s and early 70’s. The demolition of neighborhoods in the Western Addition and Fillmore Regardless of the ultimate reason for the out-migra- districts displaced the Black communities in these tion, the current focus of the City is to re-attract a neighborhoods and caused a substantial in-migra- strong African American community. The 2009 tion of Black households to the Bayview Hunters study highlighted improving new housing options Point area, disrupting the existing inter-racial mix of and current housing conditions, strengthening

______200 San Francisco Mayor’s Office of Housing State of the Housing Market Study: Briefing Book, p. 30. Data source: San Francisco Controller’s Office. 201 ACS 3-year (2008-2010) data indicate an out-migration of African-American households earning over about $45,000 per year since 2000. 202 Bayview-Hunters Point: Urban Transformations and Community Cooptation, at 9-13. 203 2010 Consolidated Plan, at 16. 204 Anastasia Hendrix, Up and Out / More black leaving inner cities for suburbs, SFGate (Apr. 17, 2001). Contra Costa and Solano counties continued to gain Black/African American residents between 2000 and 2010 and the counties of Alameda, Marin, San Mateo and Santa Clara continued to lose Black/African American residents. 2000 and 2010 Census. 57 From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

school infrastructure and access to educational pro- Plans for the districts include bringing at least grams, promoting African American business devel- 12,100 new residential units to Bayview Hunters opment and expanding employment opportunities, Point, with about one-third being priced below increasing cultural support and helping to develop a market rate. About 3 million square feet of job-gen- “sense of place” in the City, and stepping up safety erating commercial space is also planned, along and rehabilitation programs for the community. with programs for workforce development and local The City is working to incorporate these recom- hiring.205 Despite the best intentions, however, the mendations into the present redevelopment plan for City will need to work hard to overcome the stigma the Hunters Point/Candlestick Point redevelopment that many members of the community still cling to project. The City also opened the Third Street light from the early urban renewal years of gentrification rail line in 2007, reconnecting these neighborhoods and displacement and to reverse economic and with the rest of the City and inducing residential social forces causing families to leave San Francisco. and commercial development along the corridor.

______

______205 For more information see: http://www.sfredevelopment.org/index.aspx?page=53, retrieved from the SFRA’s website on October 6, 2012.

58 Poverty & Race Research Action Council National Housing Law Project (2012) (1988) Appendix 2. Evolution of San Francisco Housing Policy Housing Francisco San of Evolution 2. Appendix

59 SSan Francisco Fan nr o Ncsica Neighborhood N and anoodhorbghieo Projectojer Pd Areas Acoje MapMasert ap

From Urban Renewal and Displacement to Economic Inclusion: S.F. Affordable Housing Policy 1978-2012

Appendix 3. Map of San Francisco Neighborhoods SSan Fan Franciscoo Ncsicanr NeighborhoodN andanoodhorbghieo Pd Projectojer Acoje Areas Masert Mapap and Project Areas

Source: ModifieddoM:ecruSo from San Francisco RedevelopmentedeRocsicnaFrnSamodeid Agency (2009), RedevelopmenteR,)9002(ycnegAtnempoleve Project Area Map,paMaerAtcePrtnempolevede atta,p http://www.sfredevelopment.org/index.aspx?page=3Source:t Modifieds.ww/th from Sanedees Francisco Redevelopmentsax.ndeior.ntelv Agency3= (2009),. Redevelopment Project Area Map, at http://www.sfredevelopment. org/index.aspx?page=3.*Underlinedneilrnde*U d names are projectrerasemna ojpr areas andasaeratceojp neighborhoodsnend in eghbor discussedesuscsdi withinhitiwd thetn et reportportporerh 60 *Underlined names are project areas and neighborhoods discussed within the report

Appendix 4. List of San Francisco Housing Developments Highlighted

PAGE 16 MENDELSOHN HOUSE Yerba Buena Gardens Redevelopment Project Area

Named for Peter Mendelsohn, Co-chair of TOOR and long-term merchant seaman and resident of the Yerba Buena neighborhood, Mendelsohn House is a 189 unit senior housing complex developed by TODCO as part of the settlement of the Yerba Buena litigation. Like the other senior housing developed by TODCO, Mendelsohn House offers an array of services and amenities. The award-winning building is adjacent to the Alice Street Gardens, a thriving community garden for all the residents of the Yerba Buena senior developments.

PAGE 27 MISSION CREEK SENIOR COMMUNITY PHOTO: ALAN KARCHMER Mission Bay North Redevelopment Project Area

Part of the Mission Bay Redevelopment Project’s ambitious affordable housing program, Mission Bay Senior Community is the result of collaboration among the San Francisco Redevelopment Agency, the San Francisco Department of Public Health, the San Francisco Public Library, and the developer, Mercy Housing California. consisting of 139 units of affordable senior housing, an Adult Day Health Center, ground floor retail space, and the newest branch of the San Francisco Public Library, Mission Creek is located along a tidal creek with walking trails and plentiful green space, yet near several forms of public transit and neighborhood amenities. The community serves very low income seniors, many of whom are at risk of homelessness or who have HIV/AIDS. Like many of San Francisco’s affordable housing developments, Mission Creek has won numerous design awards.

PAGE 27 WESTBROOK PLAZA South of Market Redevelopment Project Area

Westbrook Plaza is a collaboration between the South of Market Health Center and Mercy Housing California that includes a state-of-the-art medical and dental clinic and 49 units of affordable family housing. This development represents a first for San Francisco — co-located affordable housing and health care — and allows for the doubling of services by the clinic, the largest provider of health care in this low income neighborhood.

From Urban Renewal and Displacement to Economic Inclusion: San Francisco Affordable Housing Policy 1978-2012 is available for download at: www.nhlp.org www.prrac.org 1200 18th Street NW #200 703 Market Street, Suite 2000 Washington, DC 20036 San Francisco CA 94103 202/906-8023 (415) 546-7000 Fax 202/842-2885 (415) 546-7007 (f) www.prrac.org [email protected]